Tom buys a futures contract for U.S.Treasury bonds and on the settlement date the interest rate on U.S.Treasury bonds is higher than Tom expected.Tom will have:
A)Gained money on his short position.
B)Lost money on his long position.
C)Gained money on his long position.
D)Lost money on his short position.

Question

Quizplus · Accepted Answer

When the interest rate on U.S. Treasury bonds is higher than expected, the price of the bonds will rise. Tom has a long position, which means he has agreed to buy the bonds at a certain price. When the price of the bonds rises, Tom will make a profit.

Tom Buys a Futures Contract for U