The company expects to borrow approximately $1 million in three months. The current rate of interest is 6.00% p.a. but is forecast to rise. To hedge the position, the company wishes to use 3 year Treasury bond futures contracts trading at 93.500. Calculate the profit or loss from the position in futures market if in 3 months the contracts are trading at 95.000.

Select one:

a.

40,628.94 Profit

b.

40,972.1 Loss

c.

40,628.94 Loss

d.

40,972.1 Profit