Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

MULUIL. 43.337.4.35 U 10 pts P15.6 (similar to) Question Help Test You were just notified that you will receive $100,000 in two months from the

image text in transcribed
MULUIL. 43.337.4.35 U 10 pts P15.6 (similar to) Question Help Test You were just notified that you will receive $100,000 in two months from the estate of a deceased relative. You want to invest this money in safe, interest-bearing instruments, so you decide to purchase five-year Treasury notes. You believe, however, that interest rates are headed down, and you will have to pay a lot more in two months than you would today for five-year Treasury notes. You decide to look into futures, and find a quote of 101-8.4 for five-year Treasures deliverable in two months (contracts trade in $100,000 units and require an initial margin is $680). What does the quote mean in terms of price, and how many contracts will you need to buy? How much money will you need to buy the contract, and how much will you need to settle the contract? 5-year Treasury notes are quoted at a par value of $100,000. Which of the following is the best answer? (Select the best answer below.) O A. Prices are quoted in increments of 1/32 of 1%, so the quote of 101 - 8.4 translates into 101 - 8.4/32, which converts to a quote of 101.26250% of par. Five-year Treasury notes have a par value of $100,000, so you will need to buy one contract OB. Prices are quoted in increments of 1/100 of 1%, so the quote of 101 - 8.4 translates into 101 -8.4/100, which converts to a quote of 101.0840% of par Five-year Treasury notes have a par value of $10,000, so you will need to buy ten contracts. OC. Prices are quoted in increments of 1/100 of 1%, so the quote of 101 - 8.4 translates into 101 - 8.4/100, which converts to a quote of 101.0B40% of par: Five-year Treasury notes have a par value of $100,000, so you will need to buy one contract OD. Prices are quoted in increments of 1/32 0 1%, so the quote of 101 - 8.4 translates into 101 - 84/32, which converts to a quote of 101.26250% of par. Five year Treasury notes have a par value of $10,000, so you will need to buy ten contracts Click to select your answer and then click Check Answer 2 parts remaining Clear All Final Check Type here to search 7:42 PM 12/2/202 3 5 6 8

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

Essentials Of Health Care Finance

Authors: William O. Cleverley, James O. Cleverley

8th Edition

1284094634, 978-1284094633

More Books

Students also viewed these Finance questions