Exhibit 13-2 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 71

Multiple Choice

Exhibit 13-2
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
A futures contract on Treasury bond futures with a December expiration date currently trade at 103:06. The face value of a Treasury bond futures contract is $100,000. Your broker requires an initial margin of 10%.
-Refer to Exhibit 13-2. If the futures contract is quoted at 105:08 at expiration, calculate the percentage return.

• A) 1.99%
• B) 19.99%
• C) 20.62%
• D) 25.37%
• E) -13.65%

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Definitions:

Equity Accounting

A method of accounting whereby an investor records its investment in an associate company at initial cost and subsequently adjusts the carrying amount for its share of the earnings and losses of the associate.

Reporting Entities

Organizations or entities that are required to prepare financial statements to provide information to external users such as investors, creditors, and regulatory agencies.

Control

The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.