In May and June of 2004, with a tightening of monetary policy by the Federal Reserve widely expected, market participants built large short positions in long-term debt instruments in anticipation of the increase in bond yields that has been historically associated with an initial rise in the federal funds rate.
They must be able to work out how much profit they earn from their businesses, and estimate how much additional profit, if any, they will earn if they take out a business loan and then fully service that loan. Entrepreneurs must also have a good grasp of the risks that they run.