A wealthy investor holds $300,000 worth of U.S. Treasury bonds. These bonds are currently being quoted at 106% of par. The investor is concerned, however, that rates are headed up next six months, and he would like to do something to protect this bond portfolio. His broker advises him to set up a hedge using T-bond futures contracts. Assume these contracts are at 111-28. a. Briefly describe how the investor would set up this hedge. Would he go long or short? How many contracts would he need? b. It's now six months later, and rates have indeed gone up. The investor's Treasury bonds are now being quoted at 94% of par, and the T-bond futures contracts used in the hedge are at 96-28. Show what has happened to the value of the bond portfolio and the profit (or loss) made on the futures hedge. c. Was this a successful hedge? Explain. You think bitcoin is a fad, and an overvalued one at that. You short thee bitcoin futures contracts, each of which has five bitcoins as the underlying asset, at a price of $6,455. A month later the same contract sells for $5,986. What is your dollar profit and your return on invested capital if you had to make an initial margin deposit of $41,365? What was the initial margin deposit relative to the value of the contracts you sold short? Does that percentage seem higher than the margin requirements of other assets? In general, what characteristic of bitcoin might lead the futures exchange to require a high initial margin? The profit on this transaction is $ (Round to the nearest dollar.) it turns out, you were correct when you purchased 6 contracts for feeder cattle at $1.366, as the spot price on cattle rose to 1.436 on the delivery date given in your contracts. You were require jut down 8\%. How much money did you make? What was your return on invested capital? (There are 50,000 pounds in one contract for feeder cattle.)