Calculate implied annual interest rate on futures contract

Assignment Help Financial Management

Reference no: EM13804331

A Treasury bond futures contract settles at 105'8.

What is the present value of the futures contract in dollars?

Calculate the implied annual interest rate on the futures contract?

Calculate the new value of the futures contract if interest rates increase by 1 percentage point annually.

Calculate your profit or loss if you sold a futures contract at 105-8 and purchased an offsetting contract when rates increased by 1 percentage point annually.

Reference no: EM13804331

Questions Cloud

What is economic profit and accounting profit : What is economic profit and accounting profit with the information given?

The average annual salary for a person living : In 2005, the average annual salary for a person living in the Washington,D.C. Area was about 1.16 times the average annual salary for a person living in Hartford, Connecticut. If the average annual salary in Hartford was $42,706, what was the average..

Since depreciation is a cash expense : Since depreciation is a cash expense, the faster an asset is depreciated, the lower the projected NPV from investing in the asset. Under current laws and regulations, corporations must use straight-line depreciation for all assets whose lives are 5 y..

Intangible assets be disclosed on the balance sheet : How should intangible assets be disclosed on the balance sheet?

Calculate implied annual interest rate on futures contract : A Treasury bond futures contract settles at 105'8. What is the present value of the futures contract in dollars? Calculate the implied annual interest rate on the futures contract? Calculate the new value of the futures contract if interest rates inc..

What would your pre-tax net profit be : Suppose you believe that Johnson Company's stock price is going to increase from its current level of $22.50 sometime during the next 5 months. For $310.25 you can buy a 5-month call option giving you the right to buy 100 shares at a price of $25 per..

Capital budgeting-using discounted cash flow method : In evaluating long-term capital budgeting decisions using the discounted cash flow method, the net present value calculation that produces a negative (less than $0) amount is interpreted correctly in only one of the following. A definite signal to in..

Assets decrease and owners equity decreases : On July 1, 2012, Watson Company received a $20,000 promissory note for services from Jeffs Company. The annual interest rate is 5%. Principal and interest are paid in cash at the maturity date of June 30, 2013. Assets decrease and owners' equity decr..

User Account

All Pages