1. The Investment Manager of an insurance company anticipates interest rates to decline over the next 3 months. He expects to get $100 million in 3 months which he will invest in T-Bills. He decides to hedge.
   1. (a) Should he assume a long or short position? How many contracts should he use assuming face value of T-Bill contracts is $1 million?
   2. (b) Price of T-Bills now is $ 97,510,000 for $100 million face value. The price in 3 months is $97,776,000. T-Bill Futures settlement price is $979,200 per contract now and $982,000 in 3 months. Calculate the Net Gain or Loss from the hedge.