Suppose that the table below lists prices of two Eurodollar time deposit contracts quoted on the Chicago Mercantile Exchange on June 12, 2001.

The date is June 12, 2001. A corporate treasurer wishes to increase working capital $40 million by drawing down a bank loan based on six-month LIBOR on September 14, 2001. What financial risk does the corporate treasury face now, and how can this risk be hedged using Eurodollar futures? Describe the hedge stating how many of which contract(s), the transaction involved (buy or sell) and the likely dealing price.

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Futures Contract BID OFFER SEP 01 ED 94.25 94.26 DEC 01 ED 94.16 94.17