Some years ago Ford borrowed funds at the LIBOR3M +1%. Interest payments are made on a three months basis the 1/1, 1 /4, 1/7 and 1/10 of each year. Principal payments are made every six months the 1/1 and the 1/7 of each year for an amount equal to 5,000,000 Euro. Now we are at the first of February 2015: the principal is equal to 20,000,000 Euro and you know that the LIBOR3M for the first payment (1/4) is equal to 3.5%. Determine the hedging strategy: Specify which FRA/FRAs you should negotiate, at which rate and for which amount. must present and explain in words all the steps.

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FRA 1,4	3.63%
FRA 2,5	3.75%
FRA 3,6	3.86%
FRA 4,7	3.94%
FRA 5,8	4.05%
FRA 6,9	4.21%
FRA 7,10	4.31%
FRA 8,11	4.43%
FRA 9,12	4.40%