You Hold a Forward Contract to Take Delivery of Government

question 10

Multiple Choice

You hold a forward contract to take delivery of Government of Canada 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:

Convulsive Seizures

A type of seizure involving violent muscle contractions and sudden, rapid shaking movements.

Reward Deficiency Syndrome

A theory proposing that individuals with certain genetic backgrounds have deficiencies in the pleasure centers of the brain.

Substance-Induced Dementia

Cognitive impairment and memory issues directly attributable to the prolonged use of psychoactive substances, including drugs and alcohol.

Korsakoff's Syndrome

A chronic memory disorder typically associated with heavy alcohol consumption over a long period, characterized by short-term memory loss, "making up" stories (confabulation), and apathy.