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Annual interest rate inherent in the futures contract

Problem: Suppose the December CBOT Treasury bond futures contract has a quoted price of 80-07. The T-bond is a 20-year 6% coupon bond and the interest is paid semi-annually. What is the implied annual interest rate inherent in the futures contract?

a) 6.86

b) 7.22

c) 7.60

d) 8.00

e) 8.40

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Finance Basics: Annual interest rate inherent in the futures contract

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Finance Basics: Annual interest rate inherent in the futures contract

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