You are given the following data on the 3 month sterling interest rate futures contract. The contract has a notional size of 1 million. Sterling futures contract June 2021 94 (i) Explain what the purchase of such a contract implies (ii) If you think 3 month interest rates in June 2021 will be 4% would you buy or sell the contract. Explain your reasoning and the profits you can expect if you are correct. (iii) Briefly explain how a corporate Treasurer who is looking to borrow 1 million of funds for 3 months from June 2021 might use the above contract to hedge interest rate risk.