A market timer now believes that the economy will soften over the rest of the year as the housing market slump continues and he also believes that foreign investors will stop buying U.S.fixed income securities in such large quantities as they have in the past.One way the timer could take advantage of this forecast is to ________________.

Question

Quizplus · Accepted Answer

If the economy is expected to soften, stock prices may decline, so selling stock index futures could be profitable. If foreign investors stop buying U.S. fixed income securities, bond prices may fall, so selling T-bond futures could also be advantageous.

A Market Timer Now Believes That the Economy Will Soften