If a Futures Contract Is Used to Hedge a Debt

question 21

True/False

If a futures contract is used to hedge a debt sale, and interest rates go down causing debt security prices to rise, the potential benefit of being able to issue debt at that lower interest rate (higher price) will be offset by a loss on the futures position.

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Definitions:

Self-esteem

The subjective evaluation or perception of one's own worth or value.

Pathological Personalities

Refers to personality disorders characterized by enduring maladaptive patterns of behavior, cognition, and inner experience.

Adlerian Therapy

A therapeutic approach based on the theories of Alfred Adler, focusing on community, social interests, and the individuals' power to change feelings, beliefs, and behaviors.

Hostility

Aggressive or unfriendly behavior, attitude, or disposition towards others, often resulting from frustration or anger.