Take a position in treasury bond futures contracts

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Reference no: EM131059683

Dudley Savings Bank wishes to take a position in Treasury bond futures contracts, which currently have a quote of 107 − 100. Dudley Savings thinks interest rates will go down over the period of investment. The face value of the bond underlying the futures contract is $100,000.

A. Given your answer to part (a), calculate the net profit to Dudley Savings Bank if the price of the futures contracts increases to 107 − 220.

B. Given your answer to part (a), calculate the net profit to Dudley Savings Bank if the price of the futures contracts decreases to 106 − 280.

Reference no: EM131059683

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