Discuss two reasons for using futures rather than selling bonds to hedge a bond port-folio.

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1. Reduced Transaction Costs: The costs associated with entering into futures contracts are typically much lower than those of trading bonds. Futures contracts also have a much smaller margin requirement, which allows investors to take on larger positions without committing as much capital upfront.

2. Increased Leverage: Futures markets provide more leverage than bond markets, meaning investors can control greater positions for less initial capital outlay than investing in the underlying asset itself. This makes it possible to hedge large positions and benefit from small price movements in the market without having to commit a great deal of capital upfront.