Dear Tutor,

I am not sure about what medium term market rates and today market rates and how secure the return at those to rates. Could you please provide solution with details about this question especially the (a) and (c)

Thanks

Cif. A funds manager forecasts that it will need to invest $1 million in approximately ED days. The manager wishes to receive a return as close as possible to the medium-term interest rates currently available but expects that rates will have fallen by the time the funds are available for investment. {a} Outline what the manager would do today in the nancial futures market in order to secure a return that is close to current medium-term market rates. {bl lCalculate the price of a three-year Treasury bond futures contract quoted at 95.25. A Commonwealth Treasury bond futures contract is based on a 'h': per annum fixed interest bond with a face value of $1 million and paying halfyearly coupons. {c} Outline and explain the factors that will determine how successful this strategy will be in securing an effective return that is close to today's market rates