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What kind of an option should you purchase if you anticipate selling $1 million of Treasury bonds in one year's time and wish to hedge
What kind of an option should you purchase if you anticipate selling $1 million of Treasury bonds in one year's time and wish to hedge against the risk of interest rates rising? selling $1 million of Treasury bonds in one years time and wish to You could purchase a put option that gives you (as the holder) the right but not the obligation to sell the bonds at a price determined today. Therefore, if interest rates rise and the price of the bonds rises, you can exercise the option and sell the bonds at the predetermined price O You could purchase a call option that gives you (as the holder) the right but not the obligation to sell the bonds at a price determined today. Therefore, if interest rates rise and the opvorcise the option and sell the bonds at the predetermined pce price of the bonds falls, you can exercise the option and sell the bonds at the predetermined price. O You could purchase a put option that gives you (as the holder) the right but not the obligation to sell the bonds at a price determined today. Therefore, if interest rates rise and the price of the bonds falls, you can exercise the option and sell the bonds at the predetermined price could purchase a call option that gives you (as the holder) price of the bonds rises, you can exercise the right but not the obligation to sell th at a price determined today. Therefore, if interest rates rise and sell the bonds at the predetermined price
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