An investor would want to __________ to exploit an expected rise in interest rat

Question

An investor would want to __________ to exploit an expected rise in interest rates.

Question 1 options:

Buy S&P 500 index futures and simultaneously sell the ETF (SPDR)

Take a short position in Treasury bond futures

Take a long position in wheat futures

Take a short position in oil futures

Buy Treasury bond futures

Buy S&P 500 index futures and simultaneously sell the ETF (SPDR)

Take a short position in Treasury bond futures

Take a long position in wheat futures

Take a short position in oil futures

Buy Treasury bond futures

Explanation / Answer

As interest rates rise, bond prices falls because interest rates and bond prices are inversely correlated

So ans option B , he should short Treasury bond futures so that when interest rates rise, bond prices falls and he gains

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.