Calculate the Cash Flows on the Above Futures Contract If

question 77

Multiple Choice

Calculate the cash flows on the above futures contract if all interest rates increase by 1.49 percent. (That is, ΔR/(1 + R) = 1.49 percent, and 1 bp = $25.)

• A)The long futures position earns a profit of $3,766.39.
• B)The short futures position earns a profit of $3,725.00.
• C)The long futures position earns a profit of $1.49 million.
• D)The short futures position earns a profit of $1.49 million.
• E)The short futures position suffers a loss of $3,725.

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Definitions:

Mutualism

An ecological interaction between two or more species where each species benefits and derives a positive effect from the association.

Mimicry

The resemblance of one organism to another or to an object in its surroundings for protection, predatory, or other purposes.

Chemical Warfare

The use of toxic chemical substances as weapons in military conflicts to kill, injure, or incapacitate the enemy.

Defensive Chemical

Substances produced by organisms as a defense mechanism against predators, pathogens, or to deter competition.