Which of the Following Is a Good Strategy to Adopt

question 94

Multiple Choice

Which of the following is a good strategy to adopt when interest rates are expected to rise?

• A)Buying a call option on a bond.
• B)Writing a call option on a bond.
• C)Writing a put option on a bond.
• D)Buying bond futures.
• E)All of the options.

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Definitions:

Redistribution of Income

The transfer of income from certain individuals or groups to others through mechanisms like taxes, subsidies, and social welfare programs.

Equalizing Opportunities

Efforts or policies aimed at leveling the playing field so that individuals have equal chances to succeed, regardless of their background or circumstances.

Demographic Group

A segment of the population defined by certain characteristics such as age, race, gender, or income, used in statistical analysis and marketing.

Economic Life Cycle

The different stages an individual goes through from dependence to independence, potentially to wealth accumulation, and finally to retirement and dependence once more, in terms of earning and spending.