An investor would want to ________ to exploit an expected fall in interest rates.
A) sell S&P 500 Index futures
B) sell Treasury-bond futures
C) buy Treasury-bond futures
D) buy wheat futures

Question

Quizplus · Accepted Answer

Buying Treasury-bond futures would be the most appropriate choice as the investor expects a fall in interest rates. When interest rates decrease, bond prices tend to rise. By purchasing Treasury-bond futures, the investor can profit from the expected increase in bond prices. Selling S&P 500 Index futures and buying wheat futures are unrelated to interest rates and therefore not relevant choices. Selling Treasury-bond futures would be a bad choice as it would mean that the investor is betting against their expectation of falling interest rates.

An Investor Would Want to ________ to Exploit an Expected