It is 15^th August 2021 now and a European investor intends to invest USD 10 million for 3 months in a Eurodollar deposit beginning on Dec 16, 2021.

How this investor can use Eurodollar futures contracts on 15th August 2021 to hedge against the changes in Eurodollar deposit rates prior to their investment.

i) the interest rate risk the investor is facing.

ii)the investor go long or short on the futures contract?

iii)price does the investor go long/short on August 15th?

iv)Eurodollar futures contracts must the investor use to hedge?

v)the value of the underlying asset when the contract position is first opened?

vi) the value of the underlying asset when the contract position is closed out?

vii)the gain/loss achieved by the investor when they closed out on 16^th Dec. 2021?

The table below provides information on Eurodollar futures price changes over

the hedge period.

Date Eurodollar Futures Price

15 August 2021 99.30

16 August 2021 99.24

17 August 2021 98.29

..................... ......................

16 Dec. 2021 98.50