If you bought a long contract on financial futures, you hope that interest rates ________.
A) rise
B) fall
C) are stable
D) fluctuate

Question

Quizplus · Accepted Answer

When you buy a long contract on financial futures, you are essentially betting that the price of the underlying asset will increase. In the context of interest rates, when rates fall, the value of fixed-income securities (like bonds) generally increases. Therefore, by hoping for interest rates to fall, you anticipate the value of the financial instrument tied to these rates to rise, which would be beneficial for a long position.

If You Bought a Long Contract on Financial Futures, You