Futures contract on treasury bonds

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Boyd Company sold a futures contract (one) on Treasury bonds that specified a price of 93-00. When the position was closed out, the price of the Treasury bond futures contract was 94-20.

A) Did interest rates increase or decrease? How do you know?

B) What was Boyd’s profit or loss from this contract (ignoring transaction costs)?

C) Assume that Boyd was speculating, did the company benefit from (or was it hurt by) this transaction? Explain (very) briefly.

D) Assume that Boyd was using this contract to hedge. Did Boyd benefit from, or was it hurt by, this transaction? Explain (a little less) briefly.

Reference no: EM13807314

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