Your $50 million bond portfolio is currently 95 percent invested in bonds and has a 5 percent cash reserve. The bond component of the portfolio has a duration of 4.3.The T-bond futures contract has a duration of 8.0, and a value of $105,000 per contract.

Required:

How many futures contracts must you buy or sell to change your portfolio's duration

1. to 5?
2. to 3?
3. To make the portfolio insensitive to changes in interest rates?