If a financial manager earning interest on a future date were to buy Futures and interest rates end up going up, the position outcome would be:
A) Futures price falls; short earns a profit.
B) Futures price rises; short earns a loss.
C) Future price falls; long earns a loss.
D) Futures price rises; long earns a profit.

Question

Quizplus · Accepted Answer

When interest rates rise, the price of futures contracts typically falls. If the financial manager is long on futures, they would incur a loss as the value of their position decreases.

If a Financial Manager Earning Interest on a Future Date