能详细解释一下么

问题如下：

If an investor believes that future spot rates will be below the rates predicted by the existing forward rates, the investor should:

选项：

A.sell a forward contract. B.buy a forward contract. C.neither buy nor sell a forward contract because the forward price will not change.

解释：

Solution

1. A is incorrect because if the trader expects the future spot rate to be above that predicted by the existing forward rate, then the forward contract value is expected to decrease and the trader would sell the forward contract.

2. B is correct because if a trader expects the future spot rate to be below what is predicted by the prevailing forward rate, the forward contract value is expected to increase and the trader would buy the forward contract.

3. C is incorrect because the forward contract price remains unchanged as long as future spot rates evolve as predicted by today’s forward curve.

The Term Structure and Interest Rate Dynamics

• describe the assumptions concerning the evolution of spot rates in relation to forward rates implicit in active bond portfolio management