Suppose the December CBOT Treasury Bond Futures Contract Has a Quoted

question 4

Multiple Choice

Suppose the December CBOT Treasury bond futures contract has a quoted price of 80'07.What is the implied annual interest rate inherent in the futures contract?

• A) 6.86%
• B) 7.22%
• C) 7.60%
• D) 8.00%
• E) 8.40%

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Definitions:

Essential Characteristic

A fundamental or inherent property that defines an entity, distinguishing it from others.

Liability

A company's financial debts or obligations that arise during the course of business operations.

Cumulative Preferred Stock

A type of preferred stock that entitles its holders to dividends that accrue if not paid in any year, payable before any dividends to common stockholders.

Dividends Payable

Liabilities on a company’s balance sheet representing amounts owed to shareholders as part of the profit-sharing from dividends declared.