Assume That a T-Bill Futures Contract with a Face Value

question 49

Multiple Choice

Assume that a T-bill futures contract with a face value of $1 million is purchased at a price of $95.00 per $100 face value. At settlement, the price of T-bills is $95.50. What is the difference between the selling and purchase price of the futures contract?

• A)$.50
• B)$50
• C)$500
• D)$5,000
• E)None of these are correct.

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Definitions:

Output

The total amount of goods or services produced by a company, industry, or economy within a particular period.

Economic Profit

The difference between total revenue and total economic costs (including both explicit and implicit costs), reflecting the true economic performance of a company.

Purely Competitive

An economic model where numerous small businesses operate, offering identical products, with unrestricted market entry and exit, and complete transparency of information.

Short Run

A period in which at least one input in the production process is fixed and cannot be varied to influence output.