What is the present value of the coca-cola futures contract

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A Coca-Cola bond futures contract settles at 105-8.

a. What is the present value of the Coca-Cola futures contract?

b. If the contract settles at 105-8, are current market interest rates higher or lower than the standardized rate on a futures contract? Explain.

c. What is the implied annual interest rate on the futures contract?

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

e. 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: EM131047414

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