BC_MBA_student

The question is trying to say (I think) that in a downturn market, the loss in the short position in treasury typically outweighs the “loss” in the long position. It seems they are saying that in a downmarket you lose on both positions (short treasuries, treasury prices go up, you lose…long bonds, bonds sell off, bond prices go down, you also lose). If I’m following this correctly, the loss from the treasuries is larger, may be because they go up much higher in percentage terms than corporate bonds go down!