Sue Sells a Futures Contract for U

question 88

Multiple Choice

Sue sells a futures contract for U.S. Treasury bonds and on the settlement date the interest rate on U.S. Treasury bonds is lower than Sue expected. Sue will have:

• A) lost money on her short position.
• B) gained money on her long position.
• C) gained money on her short position.
• D) lost money on her long position.

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Definitions:

Probability Distribution

A mathematical function that provides the probabilities of occurrence of various possible outcomes in an experiment.

Standard Deviation

An important measure in statistics that expresses the variability or spread of a dataset relative to its mean, indicating how spread out the data points are.

Random Variable

A variable representing numerical results from a stochastic process.

Random Experiment

An experiment or process in which all possible outcomes occur randomly with certain probabilities associated with each outcome.