Suppose the December CBOT Treasury Bond Futures Contract Has a Quoted

question 8

Multiple Choice

Suppose the December CBOT Treasury bond futures contract has a quoted price of 80'07.If annual interest rates go up by 1.00 percentage point, what is the gain or loss on the futures contract? (Assume a $1,000 par value, and round to the nearest whole dollar.)

• A) −$78.00
• B) −$82.00
• C) −$86.00
• D) −$90.00
• E) −$95.00

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Definitions:

Contribution Margin Ratio

The proportion of sales revenue that remains after variable costs are subtracted, expressed as a percentage, indicating the contribution towards covering fixed costs and generating profit.

Fixed Expenses

Costs that do not change in total despite changes in the level of business activity or production volume, such as rent or salaries.

Target Net Profit

A financial objective set by a business indicating the desired bottom-line income after all expenses, interest, and taxes have been deducted from total revenues.

Degree of Operating Leverage

A measure of how much a company's operating income changes in response to a change in sales volume, indicating the level of fixed versus variable costs.