Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question Help You were just notified that you will recelve $100,000 in 2 months from the state of a deceased relative. You want to invest

image text in transcribed
Question Help You were just notified that you will recelve $100,000 in 2 months from the state of a deceased relative. You want to invest this money in safe, interest-bearing instruments, so you decide to purchase 5-year Treasury notes. You believe, however, that interest rates are headed down, and you will have to pay a lot more in 2 months than you would today for 5-year Treasury notes. You decide to look into futures, and find a quote of 106-24.6 for 5-year Treasures deliverable in 2 months (contracts trade in $100,000 units). The initial margin is $3,780. What does the quote mean in terms of prion, 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) OA Prices are quoted in increments of 1/32 of 1% to the quote of 106 - 24.6 translates into 106 -24.6/32, which converts to a quote of 108.76876% of par 5-yen Treasury notes have a par value of $10,000, so you will need to buy ten contracts OB. Prices are quoted in increments of 1/100 of 1%, to the quote of 106 - 24.6 translated into 106-24.0/100, which converts to a quote of 106.2460% of par. 5. ymar Treasury notes have a par value of $10,000, so you will need to buy ton contracts OC. Prices are quoted in increments of 1/32 of 1%, no the quote of 100-24.6 translated into 108 - 246/32, which converts to a quote of 106.76878% of par 5 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 1/100 of 1%, so the quote of 106 - 24.6 translates into 106 - 24.6/100, which converts to a quote of 100.2460% of par 5-year Treasury notes have a par value of $100,000, so you will need to buy one contract

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

Fundamentals of Investing

Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk

12th edition

978-0133075403, 133075354, 9780133423938, 133075400, 013342393X, 978-0133075359

More Books

Students also viewed these Finance questions