If a Pension Fund Manager Is Afraid Interest Rates May

question 70

Multiple Choice

If a pension fund manager is afraid interest rates may go down on his short-term portfolio of 90-day Treasury bills, he could hedge by going:

• A)long on Treasury bill futures contracts.
• B)short (sell) on Treasury bill futures contracts.
• C)long on U.S. dollar contracts.
• D)short (sell) on the U.S. dollar contracts.

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Definitions:

Defense Mechanism

Psychological strategies brought into play by individuals, unconsciously, to cope with reality and maintain self-image.

Compensation

Refers to the total cash and non-cash payments that employees receive in exchange for their work, including salaries, bonuses, benefits, and incentives.

Semicircular Canals

Structures in the inner ear that are part of the vestibular system, helping to regulate balance and spatial orientation.

Vestibular Sense

The sense of body movement and position, including the sense of balance.