Explanation:

• Option C is correct because both long forward rate agreements (FRAs) and short interest rate futures contracts can realize gains when the market reference rate (MRR) rises above the initial fixed rate.

  • A long FRA (where the investor is the floating-rate receiver and fixed-rate payer) benefits as the MRR increases, leading to a gain.
  • A short position in an interest rate futures contract is priced based on (100 - yield), meaning the contract gains value as the yield (MRR) rises.

• Options A and B are incorrect because they exclude one of the valid strategies that would result in a gain under the given scenario.