You own a $1m par value 10-year, 7% semi-annual coupon corporate bond priced at 105. You would like to hedge against interest rate risk and find a 10-year, 5% semi-annual coupon T-bond priced at 110. How much of the T-bond par value would you need to short to provide the most effective interest risk hedge strategy?

Short $1,000,000 par value worth of the T-bond.

Short $1,109,910 par value worth of the T-bond.

Short $900,974 par value worth of the T-bond.

Short $864,594 par value worth of the T-bond.

Short $1,156,612 par value worth of the T-bond