Question 1: A corporation is interesting in issuing bonds to the public six month from today. How can we use the futures market to hedge such a transaction? What type of future contract would you recommend?
Question 2: A corporation is interested in repurchasing some of its outstanding common stock on the open market, how can we use futures on the S&P 500 to hedge such a transaction. What type of risk would be hedged in this transaction? Can we achieve a perfect hedge?