As a Hedge Instrument, Bond Futures

question 61

Multiple Choice

As a hedge instrument, bond futures:

• A)are unlikely to provide a 'perfect' hedge
• B)would be bought to protect a prospective bond issuer from a rate increase
• C)would be sold to hedge a bond portfolio from a rate rise
• D)would be bought by a speculator who predicted an unexpected rise in long-term rates.
• E)All of these are correct.

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Definitions:

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