22-101 How can the portfolio manager use futures markets to protect against the risk exposure of rising interest rates?
A)Buy interest rate futures.
B)Sell currency futures.
C)Buy currency futures.
D)Sell interest rate futures.
E)Sell stock market index futures.

Question

Quizplus · Accepted Answer

By selling interest rate futures, the portfolio manager can lock in a specific interest rate for a future date, thereby protecting against the risk exposure of rising interest rates. If interest rates increase, the value of the futures contract will decrease but the portfolio manager will benefit from the higher interest rates on the underlying securities.

22-101 How Can the Portfolio Manager Use Futures Markets to Protect