The Average Duration of the Loans Is 10 Years Assume That the Hedge Was Placed as Indicated in a Duration

Multiple Choice

The average duration of the loans is 10 years.The average duration of the deposits is 3 years. $\begin{array}{llr}\text { Consumer loans } & \$ 50 \text { million Deposits } & \$ 235 \text { million } \\\text { Commercial Loans } & \$ 200 \text { million Equity } & \$ 15 \text { million } \\\text { Total Assets } & \$ 250 \text { million Total Liabilities \& Equity } & \$ 250 \text { million }\end{array}$
Assume that the hedge was placed as indicated in a prior question,and that the BP futures contract is trading at $1.62/ $\le$ .Assume the futures contract has some days remaining to maturity.What will be the gain or loss on the hedge if it is unwound at this price?

A) $4,280,000 loss.
B) $4,000,000 loss.
C) $4,280,000 gain.
D) $4,000,000 gain.