Question：Dab Investments Co wants to secure minimum earnings on deposits of $15 million it will be making in four months' time (mid-December) for an investment period of three months (to mid-March). Which of the following would be suitable methods of hedging the exposure to a fall in interest rates over the next four months?
　　A. Buying December short dollar futures.
　　B. Selling December short dollar futures.
　　C. Selling a 4 v 7 FRA.
　　D. Buying a 3 v 7 FRA.
　　E. Buying a call option on September short dollar futures.
　　The correct answers are:
　　Selling a 4 v 7 FRA; and
　　Buying December short dollar futures.
　　The exposure to a fall in short-term interest rates can be obtained by selling a 4 v 7 FRA, buying December futures or buying a call option on December futures. Dealing in September futures or options does not provide sufficient cover against the interest rate exposure.