Please show work for this problem. Thank you! A futures contract on Treasury bon
ID: 2743535 • Letter: P
Question
Please show work for this problem. Thank you!
A futures contract on Treasury bond futures with a December expiration date currently trade at 103:06. The face value of a Treasury bond futures contract is $100,000. Your broker requires an initial margin of 10%. (Remember that 1/32 = $31.25)
If the futures contract is quoted at 105:08 at expiration and position is long in the futures contract calculate the gain or loss at maturity.
a.
$1992.00
b.
$2000.34
c.
-$2000.34
d.
$2,062.50
e.
-$2,062.50
A futures contract on Treasury bond futures with a December expiration date currently trade at 103:06. The face value of a Treasury bond futures contract is $100,000. Your broker requires an initial margin of 10%. (Remember that 1/32 = $31.25)
If the futures contract is quoted at 105:08 at expiration and position is long in the futures contract calculate the gain or loss at maturity.
a.
$1992.00
b.
$2000.34
c.
-$2000.34
d.
$2,062.50
e.
-$2,062.50
Explanation / Answer
Purchase December contract 103 6/32 percent of 100,000 = $103,187.50
Sell December contract 105 8/32 percent of $100,000 = $105,250
Gain in futures = $105,250 - $103,187.50 = $2,062.50
ANSWER = D) $2062.50