A _____ position in T-bond futures should be used to hedge falling interest rates and a _____ position in T-bond futures should be used to hedge falling bond prices.

Question

Quizplus · Accepted Answer

A long position in T-bond futures is used to hedge against a rise in interest rates and a short position in T-bond futures is used to hedge against a fall in interest rates. Conversely, a short position in T-bond futures is used to hedge against a rise in bond prices, and a long position in T-bond futures is used to hedge against a fall in bond prices. Therefore, the correct answer is A, where a long position in T-bond futures should be used to hedge against falling interest rates and a short position in T-bond futures should be used to hedge against falling bond prices.

A _____ Position in T-Bond Futures Should Be Used to Hedge