Dudley savings bank wishes to take a position in treasury


Dudley Savings Bank wishes to take a position in Treasury bond futures contracts, which currently have a quote of 107 − 100. Dudley Savings thinks interest rates will go down over the period of investment. The face value of the bond underlying the futures contract is $100,000.

A. Given your answer to part (a), calculate the net profit to Dudley Savings Bank if the price of the futures contracts increases to 107 − 220.

B. Given your answer to part (a), calculate the net profit to Dudley Savings Bank if the price of the futures contracts decreases to 106 − 280.

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Financial Management: Dudley savings bank wishes to take a position in treasury
Reference No:- TGS01405517

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