You Hold a Forward Contract to Take Delivery of Treasury

question 21

Multiple Choice

You hold a forward contract to take delivery of Treasury bonds in 9 months.If the entire term structure of interest rates shifts down over the 9-month period, the value of the forward contract will
Have _____ on the date of delivery.

• A)risen
• B)fallen
• C)not changed
• D)either risen or fallen, depending on the maturity of the T-bond
• E)collapsed

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Definitions:

Sympathetic Nervous System

Part of the autonomic nervous system that activates the body's fight or flight response to stress or emergency situations.

Digestive Activity

The process of breaking down food by mechanical and enzymatic action in the alimentary canal into substances that can be used by the body.

Sexual Arousal

The physiological and psychological state of being stimulated or excited sexually, which can lead to sexual desire and potentially sexual activity.

Sympathetic Nervous System

Part of the autonomic nervous system that prepares the body for physical activity by speeding up the heart rate, increasing blood pressure, and dilating the pupils, among other actions.