To exploit an expected increase in interest rates, an investor would most likely
A) sell Treasury bond futures.
B) take a long position in wheat futures.
C) buy S&P 500 Index futures.
D) take a long position in Treasury bond futures.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

When interest rates are expected to increase, the value of existing bonds typically decreases because new bonds will be issued at the higher rates, making the older, lower-yielding bonds less attractive. Selling Treasury bond futures allows investors to profit from the anticipated drop in bond prices.

To Exploit an Expected Increase in Interest Rates, an Investor