Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

If a financial institution goes short on a U . S . Treasury bond futures contract at 1 0 3 , and it goes long

If a financial institution goes short on a U.S. Treasury bond futures contract at 103, and it goes long on a U.S. Treasury bond contract at 106, it will if the U.S. Treasury bond contract prico selties at 115 in one year's time Suppose you purchase $100,000 face value long-term U.S. Treasury bonds at 110 and you wish to hedge your interestrate risk over the next yoar best describes your overall outcome of your hedge?
Sto
A. You lost $5,000 on the bonds and lost $5,000 on the futures contract.
B. You gained $5,000 on the bonds and lost $5,000 on the futures contract
C. You gained $5,000 on the bonds and gained $5,000 on the futures contract.
D. You lost $5,000 on the bonds and gained $5,000 on the futures contract.
gain a total of $1,000
lose a total of $6,000
lose a total of $3,000
lose a total of $9,000
If a financial institution goes short on a U.S. Treasury bond futures contract at 103, and it goes long on a U.S. Treasury bond contract at 106, it will Suppose you purchase $100,000 face value long-term U S. Treasury bonds at 110 and you wish to hedge your interest-rate risk over the next year best describes your overall outcome of your hedge?
if the U.S Treasury bond contract price settles at 115 in one year's time best describes your overall outcome of your hedge?
00,000 face value U. Treasury bonds for delivery in one year for 110. When one year has passed, interest rates have risen so that the price of $100,000 face value Treasury bond is 105. Which of the following
A. You lost $5,000 on the bonds and lost $5,000 on the futures contract.
B. You gained $5,000 on the bonds and lost $5,000 on the futures contract.
C. You gained $5,000 on the bonds and gained $5,000 on the futures contract.
D. You lost $5,000 on the bonds and gained $5,000 on the futures contract.
gain a total of $1,000
lose a total of $6,000
lose a total of $3,000
lose a total of $9,000
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

A Practical Guide To Quantitative Finance Interviews

Authors: Xinfeng Zhou

1st Edition

1735028800, 978-1735028804

More Books

Students also viewed these Finance questions