You Believe That the Spread Between the September T-Bond Contract

question 52

Multiple Choice

You believe that the spread between the September T-bond contract and the June T-bond futures contract is too large and will soon correct. This market exhibits positive cost of carry for all contracts. To take advantage of this, you should ________.

• A) buy the September contract and sell the June contract
• B) sell the September contract and buy the June contract
• C) sell the September contract and sell the June contract
• D) buy the September contract and buy the June contract

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Definitions:

Tactical Plans

Short-term actions designed to achieve specific objectives, often as part of a larger strategic plan.

Strategic Plans

Long-term, comprehensive blueprints for how an organization will achieve its goals and meet the expectations of its stakeholders.

Work Methods

The strategies, techniques, or processes employed by individuals or groups to carry out their tasks, often optimized for efficiency, quality, or safety.

Production Plans

Detailed outlines that specify the activities, resources, timelines, and costs involved in producing a product or providing a service.