Suppose you hold short positions in both a Eurodollar futures contract that matures in 6 months from
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Question:
Suppose you hold short positions in both a Eurodollar futures contract that matures in 6 months from now and a 6x9 Forward Rate Agreement. The purchasing price of the Eurodollar futures contract is 98 for a LIBOR rate=2% and the forward rate (3-month LIBOR) agreed upon in the FRA is also 2%. Suppose in 6 months, the LIBOR rate turns out to be 3%. You will ____ money in your Eurodollar futures position and ____ money in your FRA position.
A.lose, lose
B.lose, make
C.make, make
D.make, lose
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