An article on bloomberg.com in early $2020$ discussed a fund manager who believed that interest$$ rates, which had been$$ falling, would soon begin increasing.$$ Therefore, his fund was$$ "buying derivatives that will pay off if rates go back$$ up$."$

Which derivatives would his fund likely be$$ buying? How might these derivatives pay off if interest rates$$ rose?

Part $2$

This fund would likely use

forward contracts

$.$

For$$ example, the firm could

go long in the futures market by buying

Treasury note futures contracts. If interest rates do end up rising they can then

sell futures contracts at a higher price

than they initially paid to offset their initial position in Treasury notes.