Suppose that one day in early April, you observe the following prices on futures contracts maturing in June:35 for Eurodollar and 94.07 for T-bill.

Suppose that one day in early April, you observe the following prices on futures contracts maturing in June: 93.35 for Eurodollar and 94.07 for T-bill. These prices imply three-month LIBOR and T-bill settlement yields of 6.65 percent and 5.93, respectively. You think that over the next quarter the gen-eral level of interest rates will rise while the credit spread built into LIBOR will narrow. Demonstrate how you can use a TED (Treasury/Eurodollar) spread, which is a simultaneous long (short) position in a Eurodollar contract and short (long) position in the T-bill contract, to create a position that will benefit from these views.