If an investor anticipates that interest rates will increase, that individual should sell an option to buy Treasury bonds.

Question

Quizplus · Accepted Answer

When interest rates increase, the value of bonds decreases. Therefore, an investor who anticipates that interest rates will increase should sell an option to buy Treasury bonds, as the value of the option will increase as the value of the bonds decreases.

If an Investor Anticipates That Interest Rates Will Increase, That