You purchase a Treasury-bond futures contract with an initial margin requirement
ID: 2653415 • Letter: Y
Question
You purchase a Treasury-bond futures contract with an initial margin requirement of 15% and a futures price of $114,550. The contract is traded on a $100,000 underlying par value bond. If the futures price falls to $107,300, what will be the percentage loss on your position? (Input the value as positive value. Do not round intermediate calculations. Round your answer to 2 decimal places.)
You purchase a Treasury-bond futures contract with an initial margin requirement of 15% and a futures price of $114,550. The contract is traded on a $100,000 underlying par value bond. If the futures price falls to $107,300, what will be the percentage loss on your position? (Input the value as positive value. Do not round intermediate calculations. Round your answer to 2 decimal places.)
Explanation / Answer
Answer;
Calculation of loss %
Initial margin = 114550 * 15%= $17182.50
Future Price = $107300
Fall in price = 114550 -107300 = $7250
Hence Loss % = 7250 / 17182.50
=0.4219
= 42.19%
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