Suppose that the pension you are managing is expecting an inflow of funds of $1 billion next year and you want to make sure you will earn the current interest rate of 5% when you invest the incoming funds in long-term bonds.

A. How would you use the options market to do this?

B. How would you use the futures market to do this?

C.What are the advantages and disadvantages of using a futures contract rather than an option contract?