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Green Backs Bank wishes to take a position in Treasury bond futures contracts, which currently have a quote of 96-240. Green Backs thinks interest rates will go down over the period of investment.

A. Should the bank go long or short on the futures contracts?

B. Given your answer to part (a), calculate the net profit to Tree Row Bank if the price of the futures contracts increases to 99-160?

C. Given your answer to part (a), calculate the net profit to Tree Row Bank if the price of the futures contracts decreases to 94-080.

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Beverley Smith
Beverley SmithLv2
28 Sep 2019

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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.

Dudley Savings Bank wishes to take a position in Treasury bond futures contracts, which currently have a quote of 105 − 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?

B. Given your answer to part (a), calculate the net profit to Dudley Savings Bank if the price of the futures contracts increases to 105 − 220. (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 104 − 280. (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 $ _______________

Problem 10-5 (LG 10-2) 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 $

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