34. On January 1, the listed spot and futures prices of a Treasury bond were 93.8 and

93.13. You purchased $100,000 par value Treasury bonds and sold one Treasury bond

futures contract. One month later, the listed spot price and futures prices were 94 and

94.09, respectively. If you were to liquidate your position, your profits would be

A. $125 loss.

B.

$125 profit.

C.

$12.50 loss.

D.

$1,250 loss.

E.

None of these is correct.

Answer:

On bonds: $94,000 - $93,250 = $750; On futures: $93,406.25 - $94,281.25 = -$875; Net

profits: $750 - $875 = -$125.

Can you please explain how these values $94,000; $93,250; $93,406.25; $94,281.25 are determined?

Thanks!