Part 1 Suppose that the pension fund you are managing is expecting an inflow of funds of $15 million next year and you want to make sure that you will earn the current interest rate of 6% when you invest the incoming funds in long-term bonds. How would you use the futures market to do this?

Part 2. A thrift is planning to buy Treasury securities next month. To hedge the risk, should it buy or sell futures contracts? Explain.