Conyers Bank Holds U

question 87

Multiple Choice

Conyers Bank holds U.S.Treasury bonds with a book value of $30 million.However, the U.S.Treasury bonds currently are worth $28,387,500. How can the portfolio manager use futures markets to protect against the risk exposure of rising interest rates?

• A)Buy interest rate futures.
• B)Sell currency futures.
• C)Buy currency futures.
• D)Sell interest rate futures.
• E)Sell stock market index futures.

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Definitions:

Statement of Cash Flows

An account that illustrates the impact of variations in income and balance sheet positions on cash and similar assets.

Indirect Method

A method for presenting cash flow from operations that begins with net income and makes adjustments for transactions that do not involve cash.

Statement of Cash Flows

A financial report that shows how changes in balance sheet accounts and income affect cash and cash equivalents, analyzing a company’s financing, investing, and operating activities.

Operating Activities

Transactions related to the primary business activities, detailed in the cash flow statement.