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

If the interest rate on U.S. Treasury bonds is higher than Tom expected, the price of the futures contract will fall, resulting in Tom losing money on his long position.

Tom Buys a Futures Contract for U