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Assume that the Treasury bond futures price falls to 91.4%. What is your loss or gain?

Question:

Suppose you purchase a Treasury bond futures contract at a price of 92% of the face value, $100,000. Assume that the Treasury bond futures price falls to 91.4%. What is your loss or gain?

Futures:

Futures contracts allow the purchaser of the contract to acquire a particular asset at a specified price in the future. These contracts are highly standardized and trade on organized exchanges.

Answer and Explanation: 1

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Let,

  • P1 be the futures price after the change.
  • P0 be the price before the change.

Your gain or loss is simply the difference between the selling...

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What are Futures Contracts? - Definition & Examples

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Chapter 38 / Lesson 3
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Learn all about futures. Read a detailed definition of futures contract, understand what futures are in finance, and see an example of a futures contract.


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