. A firm has a $10 million variable rate investment at 5% a year (equal to the current market interest rate) but expects interest rates to fall. A. What can the firm do using the interest rate futures market to effectively transform this $10 million variable rate exposure into a $10 million fixed rate exposure? Does the firm buy or sell an interest rate futures contract in government T-bills? B. If market interest rates fall to 4% in the future, explain what the firm's actual variable rate investment income will be and how the interest rate futures contract affects the outcome. C. A different firm has a $10M variable rate bank loan but expects interest rates to rise. Should this firm buy or sell an interest rate futures contract to hedge this interest rate risk? Why? D. Is it possible that the second firm is on the opposite side of the first firm's futures contract? Explain.