Examine an ex-post long hedging position for a future T-bond or T-note purchase.

a. Select a futures contract and use one of the cheapest-to-deliver bonds or notes on the contract as the bond or note you plan to purchase, and use the expiration date on the futures contract as the date of your bond or note purchase.

b. Use the Chart screen (Chart ) to create multigraphs for the prices on the futures and cheapest-to-deliver bond. On the Chart Menu screen, select the Standard G chart. Once you have loaded your securities, go to "Edit" to put your graphs in separate panels.

c. Select a beginning date that you would have implemented your hedge and a closing date near the futures expiration as the date for purchasing the bond and closing your hedge. Calculate the profit or loss on the futures position from opening and closing at the futures prices at the beginning and ending dates, the cost of purchasing the cheapest-to-deliver bond on the closing date, and the hedged cost (bond purchase minus futures profit). Compare your hedged cost to the unhedged cost. In retrospect, was the hedge a good strategy?