Take position in treasury bond futures contracts

Assignment Help Financial Management

Reference no: EM131618155

Dudley Savings Bank wishes to take a position in Treasury bond futures contracts, which currently have a quote of 119 − 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. Should the bank go long or short on the futures contracts? Long Short b. Given your answer to part (a), calculate the net profit to Dudley Savings Bank if the price of the futures contracts increases to 119 − 210. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Net profit $ c. Given your answer to part (a), calculate the net profit to Dudley Savings Bank if the price of the futures contracts decreases to 118 − 270. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Net profit $

Reference no: EM131618155

Questions Cloud

Explain with a suitable firm and market diagram : What will happen to your answers in (b) in the long run? Explain with a suitable firm and market diagram.

What effect do you feel ethical standard have on audience : What effect do you feel it will have on the audience? Note: Do not be crude, rude, or offensive in this essay. Simply demonstrate your grasp of ethics.

Most actively managed mutual funds : Most actively managed mutual funds, when compared to a market index such as the Wilshire 5000, usually

What is meant by adverse possession : What is meant by "adverse possession"? Why is it ef?cient? Give three (3) examples, explaining when "adverse possession" applies in each case

Take position in treasury bond futures contracts : Dudley Savings Bank wishes to take a position in Treasury bond futures contracts, Should the bank go long or short on the futures contracts?

Conduct research and locate academic and industry-relevant : The purpose of this assignment is to conduct research and locate academic and industry-relevant sources to support your Three Pillars Essay assignment in Topic

The principles of market-based management : Southwest Airlines & Koch Industries are both known for their distinctive organizational cultures, & both have been highly successful and profitable companies

How many contracts do you buy or sell : The multiplier on Treasury note futures is $100,000. How many contracts do you buy or sell?

Kind of trade restrictions : Business es are always asking congress to grant them some kind of trade restrictions.

User Account

All Pages