3. In 5 months, you plan to borrow $10,000,000 for 3 months and have chosen to hedge your interest rate risk by buying a 518 forward rate agreement with an AR=3%. You can borrow at Libor + 1%. Suppose at the maturity of the FRA, the market interest rate (or SR) is 1.5%. What is the payoff of the FRA? What is your effective borrowing rate? 4. How could you have hedged your interest rate risk in Problem 3 through use of a Eurodollar futures contract? 3. In 5 months, you plan to borrow $10,000,000 for 3 months and have chosen to hedge your interest rate risk by buying a 518 forward rate agreement with an AR=3%. You can borrow at Libor + 1%. Suppose at the maturity of the FRA, the market interest rate (or SR) is 1.5%. What is the payoff of the FRA? What is your effective borrowing rate? 4. How could you have hedged your interest rate risk in Problem 3 through use of a Eurodollar futures contract