Conyers Bank Holds U

question 105

Multiple Choice

Conyers Bank holds U.S.Treasury bonds with a book value of $30 million.However, the U.S.Treasury bonds currently are worth $28,387,500. The portfolio manager for Conyers Bank wishes to sell the entire issue of Treasury bonds at a current price of 87-05/32^nds.What will be the gain or loss on the cash position since the futures contract was placed? (That is, since the bonds were valued at $28,387,500.)

• A)Loss of $3,834,375.
• B)Loss of $3,853,125.
• C)Gain of $2,240,625.
• D)Gain of $3,853,125.
• E)Loss of $2,240,625.

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