Exhibit 20.2 Use the Information Below for the Following Problem(S)

question 39

Multiple Choice

Exhibit 20.2
Use the Information Below for the Following Problem(S)
A futures contract on Treasury bond futures with a December expiration date currently trade at 103:06. The face value of a Treasury bond futures contract is $100,000. Your broker requires an initial margin of 10%.
-Refer to Exhibit 20.2.Calculate the current value of one contract.

• A) $100,000
• B) $103,600.5
• C) $103,187.5
• D) $102,306.3
• E) $104,293.5

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Definitions:

Bond Premium

The excess of a bond's market price over its nominal value.

Market Rate

The prevailing interest rate available in the marketplace for loans or investments of similar risk and maturity.

Contractual Rate

The interest rate stated in a contract, such as in a loan agreement or bond indenture, determining the amount of interest payments.

Premium on Bonds Payable

The amount by which the sale price of a bond exceeds its face value, reflecting higher-than-market interest rates or increased demand for the bond.