If a trader buys a financial futures contract and interest rates rise, the trader will:
A) lose money
B) make a gain
C) break even

Question

Quizplus · Accepted Answer

When interest rates rise, the prices of existing futures contracts typically decrease because new contracts can be created that offer higher yields. Therefore, if a trader has bought a financial futures contract and interest rates rise, the value of their contract is likely to decrease, leading to a potential loss.

If a Trader Buys a Financial Futures Contract and Interest