If a Financial Manager with an Interest Liability on a Future

question 44

Multiple Choice

If a financial manager with an interest liability on a future date were to sell Futures and interest rates end up going up, the position outcome would be:

• A) Futures price falls; short earns a profit.
• B) Futures price rises; short earns a loss.
• C) Future price falls; long earns a loss.
• D) Futures price rises; long earns a profit.

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Definitions:

Mortgage

A transfer of an interest in property for the purpose of creating a security for a debt.

Partnership Property

Assets purchased or acquired for the purpose of the partnership business, jointly owned by all partners according to the partnership agreement.

Legal Position

The stance or argument taken on a legal issue, often based on laws, precedents, and principles.

Partnership

A legal form of business operation between two or more individuals who share management and profits.