In futures markets investors who expect to purchase future bonds may hedge against the effects of falling interest rates by:

Question

Quizplus · Accepted Answer

Buying bond futures contracts allows investors to lock in a price for the bonds they plan to purchase in the future, essentially hedging against the risk of falling interest rates. The other options either involve taking advantage of market inefficiencies (arbitrage) or opening positions that may amplify the effects of interest rate changes.

In Futures Markets Investors Who Expect to Purchase Future Bonds