1. You manage a small US Treasury bond portfolio and due to rising rates you are concerned about diminishing value and have decided to hedge 100% of the portfolio: You have to calculate the weighted duration of the portfolio and then using the 20yr T-Bond Futures ( $100,000 contract with a duration of 13.4283) decide how to hedge the portfolio using the duration hedging technique. How many T-Bond futures do you need and do you go short or long? Discuss the basis risk here