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:

Rebate

A partial refund given to someone who has paid too much for tax, rent, or a utility.

Mailbox Rule

The mailbox rule is a legal principle that an offer is considered accepted once the acceptance is properly placed in the mail, even if it is lost or delayed.

Effective Upon Dispatch

Effective upon dispatch refers to the principle that certain actions, such as the sending of a notification or document, are considered effective from the moment they are sent, not when they are received.

Reasonable Expectation

refers to what an average person might foresee or predict as a likely outcome under certain circumstances, often used as a standard in legal and ethical considerations.