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 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
- 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...
See full answer below.
Become a member and unlock all Study Answers
Start today. Try it nowCreate an account
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
fromChapter 38 / Lesson 3
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.