If a Financial Manager Earning Interest on a Future Date

question 32

Multiple Choice

If a financial manager earning interest on a future date were to buy 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:

Trade Permits

Authorizations given by government or other regulatory bodies allowing businesses to engage in foreign trade activities.

Pollution Reduction

Actions or initiatives undertaken to decrease the amount of pollutants released into the environment.

MC Of Reducing

The marginal cost associated with reducing an output or activity, usually referring to cutting down on production or operational processes.

Marginal Social Benefit

The additional benefit to society from consuming or producing one more unit of a good or service.