lucasg85

A was my original reasoning based on my initial thoughts on how this works.

Since reading the responses to the other post, B makes sense... but I hate to be the bearer of bad news b/c the answer is C...

"If he adds a short position in Eurodollar futures to the existing liability in the correct amount, he is able to lock in a specific interest rate. A short Eurodollar position will increase in value if interest rates rise because the contract is quoted as a discount instrument so increases in rates reduce the futures price."