Conyers Bank Holds U

question 2

Multiple Choice

Conyers Bank holds U.S.Treasury bonds with a book value of $30 million.However,the U.S.Treasury bonds currently are worth $28,387,500.

If T-bond futures prices decrease to 81-27/32^nds,what is the value of the futures hedge position?

• A)$81,270,000.
• B)$24,553,125.
• C)$26,700,000.
• D)$812,700.

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Definitions:

Present Values

The present value of an anticipated amount of money or series of cash flows, using a designated rate of return.

Revenues

The total income generated by a company or entity from its business activities, such as sales of goods or services.

Interest Rates

The cost of borrowing money or the return for investing money, usually expressed as a percentage.

Cement Truck

A vehicle equipped with a revolving drum used for mixing cement with water, sand, and gravel to make concrete and transporting it to construction sites.