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The price of a bond decreases from $112 to $107. Assuming the strike (exercise) price on a derivatives contract is $110, this would result in
The price of a bond decreases from $112 to $107. Assuming the strike (exercise) price on a derivatives contract is $110, this would result in an immediately recognized loss on a _____________ on a bond, and a paper gain on a bond ______________.
A. long futures contract; call option
B. short futures contract; call option
C. long futures contract; put option
D. None of the above.
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