Bill Baher, a private investor, purchased a futures contract on Treasury bonds a

Question

Bill Baher, a private investor, purchased a futures contract on Treasury bonds at a price of 102-12. Two months later, Baher sells the same futures contract in order to close out the position. At that time, the futures contract specifies 103-15. What is Baher's nominal profit? The par value of the futures contract is $100,000.

a.

$1,030.00; profit

b.

$1,030.00; loss

c.

$1,093.75; profit

d.

$1,093.75; loss

e.

none of the above

a.

$1,030.00; profit

b.

$1,030.00; loss

c.

$1,093.75; profit

d.

$1,093.75; loss

e.

none of the above

Explanation / Answer

Nominal profit:

= $100,000*(1.0315-1.0212)

= $100,000*0.0103

= $1,030 profit

Hence, correct option is (a) $1,030.00; profit

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