Which of the following bond option positions increase in value when interest rates increase?

Name: Which of the following bond option positions increase in value when interest rates increase?
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Question

Quizplus · Accepted Answer

When interest rates increase, bond prices decrease. Long put option positions and written call option positions both increase in value when bond prices decrease, making them the only options that profit from an increase in interest rates. Therefore, choice B (long put; written call) is the correct answer.

Which of the Following Bond Option Positions Increase in Value