You Are Long 5 Eurodollar Futures Contracts

question 22

Multiple Choice

You are long 5 eurodollar futures contracts.If the Libor rate underlying the contract increases by 5 basis points,your position gains the following value:

• A)-$25
• B)+$25
• C)-$125
• D)+$125

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Definitions:

Corporate AMT Income

Corporate AMT Income refers to the calculation used to determine the Alternative Minimum Tax payable by a corporation, ensuring that companies pay at least a minimum amount of tax.

Subchapter S Corporation

A type of corporation in the U.S. that elects to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code, allowing income to be passed through to shareholders and taxed at an individual level.

Shareholder Basis

The amount invested in a company by its shareholders plus any earnings retained by the company.

Earnings and Profits

A measure used for tax purposes, representing a corporation's net income plus or minus certain tax-preferred items.