A Corporation Will Be Issuing Bonds in 6 Months and the Treasurer

question 56

Multiple Choice

A corporation will be issuing bonds in 6 months and the Treasurer is concerned about unfavorable interest rate moves in the interim.The best way for her to hedge the risk is to _________________.

• A) buy T-bond futures
• B) sell T-bond futures
• C) buy stock index futures
• D) sell stock index futures

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Definitions:

Discretionary Income

The portion of a person's income remaining for investment, savings, or expenditures after deducting taxes and essential living costs such as housing and food.

Personal Income

Refers to the total earnings received by individuals, including wages, salaries, bonuses, and income from investments.

Discretionary Income

the portion of an individual's income available for spending after the essentials (like food, shelter, and clothing) have been taken care of.

Household Budget

An estimation of revenue and expenses over a specified period for a home, serving as a plan for personal financial management.