A Bank Agrees to Buy from a Customer a "Three

Multiple Choice

A bank agrees to buy from a customer a "three against six" FRA at the market rate for such instruments.How can the bank hedge this obligation?

A) Go long a 6-month Eurodollar deposit in the amount of the FRA at the current 6-month rate financed by going short a 3-month Eurodollar deposit in the amount of the FRA at the current 3-month rate.
B) Go short a 6-month Eurodollar deposit in the amount of the FRA at the current 6-month rate; go long a 3-month Eurodollar deposit in the amount of the FRA at the current 3-month rate.
C) Borrow a 3-month Eurodollar deposit in the amount of the FRA at the current 3-month rate.
D) none of the options