Derivatives Q87

0. If futures prices are positively correlated with interest rates, a long party:

  • Option : A
  • Explanation : If futures prices are positively correlated with interest rates, futures contracts are more desirable to holders of long positions than are forwards. This is because rising prices lead to future profits that are reinvested in periods of rising interest rates, and falling prices lead to losses that occur in periods of falling interest rates.
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