You anticipate a three-month borrowing in 6 months' time. To hedge the interest-rate exposure you can go either
A) Long a $6 \times 9$ FRA or long a eurodollar futures contract maturing in 6 months.
B) Short a $6 \times 9$ FRA or long a eurodollar futures contract maturing in 6 months.
C) Long a $6 \times 9$ FRA or short a eurodollar futures contract maturing in 6 months.
D) Short a $6 \times 9$ FRA or short a eurodollar futures contract maturing in 6 months.

Question

Quizplus · Accepted Answer

To hedge against rising interest rates for future borrowing, you should take a position that benefits from an increase in rates. Going long on a $6 \times 9$ FRA locks in the borrowing rate, while shorting a eurodollar futures contract benefits from rate increases.

You Anticipate a Three-Month Borrowing in 6 Months' Time 6×96 \times 96×9

You Anticipate a Three-Month Borrowing in 6 Months' Time $6 \times 9$