FEDERAL FUNDS FUTURES

a) Assuming that the size of a change by the FOMC is always 25 basis points,

compute the probability of a 25 basis points increase in the upcoming meeting on January 31/Febuary 1, 2018. (Hint: use the information on \CME Group FedWatch

Tool-Fed Funds futures Probability Tree Calculator" to help you determine the steps

in the following calculations.

Compute the probability of having only one rate hike over the coming two FOMC meetings (assuming that the probability of rate hikes are independent between the two coming meetings)?

FEDERAL FUNDS FUTURES a) Assuming that the size of a change by the FOMC is always 25 basis points, compute the probability of a 25 basis points increase in the upcoming meeting on January 31/Eebuary 1, 2018. (Hint: use the information on ICME Group FedWatch Tool-Fed Funds futures Probability Tree Calculator" to help you determine the steps in the following calculations. Table 6: Settlement prices of FF futures on January 4h, 2018 Jan 2018 98.5875 Jul 2018 98.2350 Feb 2018 98.5850 Aug 2018 98.2100 Mar 2018 98.5250 Sep 2018 98.2100 Apr 2018 98.3900 Oct 2018 98.1100 May 2018 98.3800Nov 201898.1000 Jun 2018 98.3000 Dec 2018 98.0750 Compute the probability of having only one rate hike over the coming two FOMC meetings (assuming that the probability of rate hikes are independent between the two coming meetings)? FEDERAL FUNDS FUTURES a) Assuming that the size of a change by the FOMC is always 25 basis points, compute the probability of a 25 basis points increase in the upcoming meeting on January 31/Eebuary 1, 2018. (Hint: use the information on ICME Group FedWatch Tool-Fed Funds futures Probability Tree Calculator" to help you determine the steps in the following calculations. Table 6: Settlement prices of FF futures on January 4h, 2018 Jan 2018 98.5875 Jul 2018 98.2350 Feb 2018 98.5850 Aug 2018 98.2100 Mar 2018 98.5250 Sep 2018 98.2100 Apr 2018 98.3900 Oct 2018 98.1100 May 2018 98.3800Nov 201898.1000 Jun 2018 98.3000 Dec 2018 98.0750 Compute the probability of having only one rate hike over the coming two FOMC meetings (assuming that the probability of rate hikes are independent between the two coming meetings)