Bob, a United States portfolio manager, is monitoring the investments that he made in high-risk stocks in U.S. and Japanese firms. He recognizes that these are high-risk investments and wants to hedge against adverse effects that may result from various types of risk. He expects that over the next year, U.S. and Japanese interest rates will decrease, the U.S. stock market will perform poorly, the Japanese stock market will perform well, and the Japanese yen will depreciate against the dollar.

1) What type of position should Bob consider taking in U.S. and Japanese bond futures to hedge his investment portfolio?

a) Bob should sell U.S. bond futures and buy Japanese bond futures.

b) Bob should buy both U.S. and Japanese bond futures.

c) Bob should buy U.S. bond futures and sell Japanese bond futures.

d) Bob should sell both U.S. and Japanese bond futures.

2) What type of position should Bob consider taking in U.S. and Japanese stock index futures to hedge his investment portfolio?

a) Bob should sell both U.S. and Japanese stock index futures.

b) Bob should buy U.S. stock index futures and sell Japanese stock index futures.

c) Bob should buy both U.S. and Japanese stock index futures.

d) Bob should sell U.S. stock index futures and buy on Japanese stock index futures.

3) What type of position should Bob consider taking in Japanese currency futures to hedge his investment portfolio?

a) Bob should sell Japanese yen futures.

b) Bob should not take a position on Japanese yen futures.

c) Bob should buy Japanese yen futures.