Question: It is January 1. Your firm expects to issue (borrow) three- month Eurodollar time deposits at the beginning of February, May, August, and November in

It is January 1. Your firm expects to issue (borrow) three- month Eurodollar time deposits at the beginning of February, May, August, and November in the next year. Explain what position(s) you would take today with FRAs based on three-month LIBOR if you wanted to fully hedge your future borrowings. Why should the hedge work? What risks do you take?

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