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

question 34

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 differencebetween the selling and purchase price of the futures contract?

• A) $.50
• B) $50
• C) $500
• D) $5,000
• E) none of the above

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Definitions:

Revenue Recognized

Income that a company has earned and reported in its financial statements for a specific period, following accounting principles.

Trading Investments

Securities that are purchased by a firm for the purpose of realizing a short-term profit.

Long-Term Trading Investments

Investments in stocks, bonds, or other securities that a company intends to hold for a period longer than a year to achieve long-term financial goals.

Strategic Investments

Investments made to gain a competitive advantage or achieve long-term goals rather than for short-term profit.