Practice Problem - Hedging with Forward Contracts - Suppose a financial institution holds a \$1 million face value portfolio of 30-year government bonds on the balance sheet. - At time 0 , the market values these bonds at $95 per $100 of face value, or $950,000 in total. - Assume that the financial institution receives a forecast that interest rates are expected to rise by 1% from the current level of 4% to 5% over the next three months. - If the 30-year maturity bond portfolio has a duration of 12 years, how could the financial institution use forward contracts to hedge the interest rate risk