Question: General Forge and Foundry Co. is planning to build a new production facility that will cost $10 million. It plans to finance this project with

General Forge and Foundry Co. is planning to build a new production facility that will cost $10 million. It plans to finance this project with 10-year bonds that would carry a 7% interest rate if they were issued today. However, the company does not need the money for six months. Which of the following actions would hedge General Forge and Foundry Co. against an increase in interest rates?

Take a long position in interest rate futures

Take a short position in interest rate futures

Take a short position in foreign exchange futures

Take a long position in foreign exchange futures

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