Explain and calculate the hedge ratio for a position of 10 Mio. nominal 4% Bund with a maturity of 8 years using a sensitivity hedge. The interest rate is 4% for all maturities (30/360, bond base), we assume no credit spread e.g. the swap rate and the bond yield are the same. a) Hedge with the Bund Future. The cheapest to deliver is a 5% Bund with a maturity of 10 years (30/360, bond base). (25 points) b) Explain the risks involved. (10 points)