You are a financial manager and you have bonds worth $3,000,000 in your portfolio which have a 7 percent coupon rate and will be maturing in 10 years from now. The market rate is also 7 percent....

You are a financial manager and you have bonds worth $3,000,000 in your portfolio which have a 7 percent coupon rate and will be maturing in 10 years from now. The market rate is also 7 percent. Suppose a futures contract on these bonds is available with a standard contract size of $300,000 per contract.

a) If options contracts are available in the size of 100 options per contract at a price of $5 per contract, do you think you would have hedged better if you had used an options contract on these bonds with an exercise price of $3,140,000?