If a Financial Institution Expects That the Market Value of Its

question 71

Multiple Choice

If a financial institution expects that the market value of its municipal bonds will decline because of economic conditions, it could hedge its position by ____ futures contracts on ____.

• A)purchasing; Treasury bonds
• B)purchasing; the S&P 500 Index
• C)purchasing; a Municipal Bond Index
• D)selling; a Municipal Bond Index

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Definitions:

Inherently Negative Concepts

Ideas or terms that possess a negative quality or connotation by their very nature, without needing external context to be perceived as negative.

Metaphorical Definitions

Descriptions of concepts or terms that use metaphor to convey the intended meaning by referring to something that it does not literally denote, in order to suggest a similarity.

Vague

Vague describes something that is unclear, lacking in precise detail, or not explicitly expressed.

Obscure

Not clearly expressed or easily understood; vague or ambiguous.