To protect against interest rate risk,the mortgage banker who has committed to lending funds but has yet to raise those funds should:
A) buy futures,as this position will hedge losses if rates rise.
B) sell futures,as this position will hedge losses if rates rise.
C) sell futures,as this position will add to his gains if rates rise.
D) buy futures,as this position will add to his gains if rates rise.
E) avoid the futures market.
Correct Answer:
Verified
Q1: The party most apt to take a
Q3: Hedging in the futures markets can reduce
Q4: A potential disadvantage of forward contracts versus
Q5: The buyer of a forward contract will
Q6: Futures contracts:
A)are traded off-exchange.
B)require delivery on a
Q7: Comparing long-term bonds with short-term bonds,long-term bonds
Q8: A forward contract is described as agreeing
Q9: Which one of the following is not
Q10: A miller who needs wheat to mill
Q11: A 3-month futures contract on gold is
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