You think that market interest rates are going to fall. In order to make money (or to reduce losses), you could _______________.
A) Buy a put option on Treasury bonds.
B) Sell a put option on Treasury bonds.
C) Buy an interest rate cap.
D) Sell a Treasury bond futures contract.
E) Sell a call option on Treasury bonds.

Question

Quizplus · Accepted Answer

Selling a put option on Treasury bonds can be profitable if interest rates fall, as bond prices would rise, making the put option less valuable or worthless, allowing you to keep the premium.

You Think That Market Interest Rates Are Going to Fall