Suppose you are currently in the long position of a long-term bond.In this case,to hedge against a capital loss,you would enter into a ________ contract to ________ a long-term bond in the future.
A)interest-rate forward;sell
B)interest-rate forward;buy
C)exchange-rate forward;buy
D)exchange-rate forward;sell

Question

Quizplus · Accepted Answer

To hedge against a capital loss in a long-term bond, you would enter into an interest-rate forward contract to sell the bond in the future. This protects against the risk of rising interest rates, which would decrease the bond's price.

Suppose You Are Currently in the Long Position of a Long-Term