A Bond Portfolio Manager Expects a Cash Outflow of $35,000,000

question 31

Multiple Choice

A bond portfolio manager expects a cash outflow of $35,000,000.The manager plans to hedge potential risk with a Treasury futures contract with a value of $105,215.The conversion factor between the CTD and the bond specified in the Treasury futures contract is 0.85.The duration of bond portfolio is 8 years,and the duration of the CTD bond is 6.5 years.Indicate the number of contracts required and whether the position to be taken is short or long.

• A) 333 contracts short
• B) 333 contracts long
• C) 348 contract short
• D) 348 contracts long
• E) None of the above

Understand how accounting information supports management and operation decisions within a company.

Understand the basic principles of accounting and the role of accounting in businesses.

Comprehend the differences between various types of business organizations and their characteristics.

Identify the users of accounting information and their specific needs.

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Definitions:

Water Consumption

The amount of water used by individuals, businesses, or agricultural processes, often measured to assess sustainability or efficiency.

Price Increase

A rise in the cost of goods or services compared to previous prices.

Price Elasticity of Demand

Determining how a change in a product's price affects the demand for that product.

Krispy Kreme Doughnut

A brand known for its signature glazed doughnuts and other sweet treats, operating worldwide.