A company is going to borrow £6m in three months’ time for a period of six months.

It is afraid that interest rates will rise between now and the time that the loan is taken out. It intends to hedge the risk using futures contracts. Given that the contract size of interest futures is £500 000, which of the following transactions will enable the company to hedge its risk exposure successfully?

(a) Selling 12 futures contracts;

(b) Buying 12 futures contracts;

(c) Selling 24 futures contracts;

(d) Buying 24 futures contracts;

(e) Selling 6 futures contracts.