Financial Risk Manager Part 1
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Ultimate access to all questions.
A German housing corporation needs to hedge against rising interest rates. It has chosen to use futures on 10-year German government bonds. Which position in the futures should the corporation take, and why?
A
Take a long position in the futures because rising interest rates lead to rising futures prices.
B
Take a long position in the futures because rising interest rates lead to declining futures prices.
C
Take a short position in the futures because rising interest rates lead to rising futures prices.
D
Take a short position in the futures because rising interest rates lead to declining futures prices.