To hedge a long position in Treasury bonds,an investor most likely would

Question

Quizplus · Accepted Answer

To hedge a long position in Treasury bonds, an investor would sell interest rate futures. This is because the value of Treasury bonds decreases as interest rates rise. By selling interest rate futures, the investor can offset any potential losses from a rise in interest rates. Buying interest rate futures (choice A) would increase the investor's exposure to interest rate risk. Selling S&P futures (choice B) would not hedge a long position in Treasury bonds as it is a completely different asset class. Buying Treasury bonds in the spot market (choice D) would increase the investor's exposure to Treasury bonds rather than hedging their current position. Therefore, the correct choice is C.

To Hedge a Long Position in Treasury Bonds,an Investor Most