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If You Forecast That Interest Rates Are Likely to Decrease

question 17

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If you forecast that interest rates are likely to decrease over the next several years, you might sell a T-bond futures contract or buy an interest rate cap to take advantage of your expectations.

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Definitions:

Net Present Value

A financial metric used to assess the profitability of an investment, calculated by subtracting the present value of cash outflows from the present value of cash inflows.

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