Calculate the present value of one futures contract

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A Treasury bond futures contract settled at 97'16.

a. Calculate the present value of one futures contract?

b. Are current market interest rates higher or lower than the standardized rate on a futures contract? Explain.

c. Calculate the implied annual interest rate on the futures contract.

d. Calculate the new value of the futures contract if interest rates increase by 1 percentage point annually.

e. Why do companies enter into futures contracts? Provide a specific example.

Reference no: EM13260386

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