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.

Calculate and interpret the contribution margin and its relation to fixed costs and operating income.

Understand the concept of break-even point and how various costs and sales levels affect it.

Recognize the different types of costs (fixed, variable, mixed) and their impact on cost-volume-profit analysis.

Grasp the significance of contribution margin in determining break-even points and making profit-related decisions.

---

Definitions:

Population Variances

A measure of the spread between numbers in a data set, representing the average of the squared differences from the population mean.

F-distribution

A probability distribution that arises in the testing of whether two population variances are equal; used in analysis of variance (ANOVA).

Population Variances

The measure of how data points in an entire population are spread out from the population mean.

Population Variance

A measure that quantifies how much the values in a population deviate from the mean of the population.