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Suppose that the pension you are managing is expecting an inflow funds of $100 million next year and you want to make sure that you
Suppose that the pension you are managing is expecting an inflow funds of $100 million next year and you want to make sure that you will earn the current interest rate of incoming funds in long-term bonds.
(i) How would you use the options market to accomplish this goal?
(ii) What are the advantage and disadvantage of using an options contract rather than a futures contract?
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