If at the expiration date, the deliverable Treasury bond is selling for 101 but the Treasury bond

Question:

If at the expiration date, the deliverable Treasury bond is selling for 101 but the Treasury bond futures contract is selling for 102, what will happen to the futures price? Explain your answer.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Financial Markets And Institutions

ISBN: 978-0132136839

7th Edition

Authors: Frederic S. Mishkin, Stanley G. Eakins

See More Books

Question Posted: Nov 12, 2012 01:15 AM

See More Questions

What will happen to the equilibrium price and quantity of beef if the price of chickenfeed increases?
Explain in detail what will happen to an insurance company that charges teen-age males the same rates for automobile insurance as it charges its other customers.
14. The higher the amount of dividends a stock pays, the a. the lower its dividend yield. b. the higher the value of a call option. c. the value of a call will increase immediately after the...
The following information has been extracted from the financial statements of XYZ Ltd for the year ended 31 December 2022: Income Statement Sales revenue: $3,000,000 Cost of goods sold: $1,200,000...
Give a geometrical interpretation of a linear equation in three unknowns. Give a geometrical description of the possible solution sets for a 3 3 linear system.
What is a double-barreled question?
If the allowable bearing stress for the plates under the supports at A and B is ( b ) allow =1.8 MPa, determine the size of square bearing plates A and B required to support the load. Dimension the...
Richard McCarthy (born 2/14/64; Social Security number 100-10-9090) and Christine McCarthy (born 6/1/1966; Social security number 101-21- 3434) have a 19-year-old son (born 10/2/99 Social Security...
2. Define "perfect competition" and "monopoly." Besides wheat, list three other products or services that have markets like perfect competition. List three products or services that have markets like...
Richard chooses technique 0 and 2 requiring 10+10-20 efforts and provising 10+11=21 benefits. Hence, 21 is returned as the output Example 2: input1: 3 input2: (10,10,10,10) input3: (10,11,12,15)...
Why does a lower strike price imply that a call option will have a higher premium and a put option a lower premium?
Suppose that the pension you are managing is expecting an inflow of funds of $100 million next year and you want to make sure that you will earn the current interest rate of 8% when you invest the...
Two passenger trains are passing each other on adjacent tracks. Train A is moving east with a speed of 13 m/s, and train B is traveling west with a speed of 28 m/s. (a) What is the velocity...
Conclusion : Conclude your analysis. Did the news report help you better understand how intercultural communication barriers impact all people, all cultures? The Sentinelese Tribe: Sentinel Island's...
A piano wire with mass 3.35 g and length 78.0 cm is stretched with a tension of 32.0 N. Awave with frequency 115 Hz and amplitude 1.90 mm travels along the wire Part A Calculate the average power...
when it comes to making hires, how can HR managers make use of selections tools like the Myers-Briggs Type Indicator and the DiSC Personality? Please explain it very well.
What does the industry - based view focus on ? Government and societal forces . The firm's internal strengths and weakness . ABC The firm's competitive forces within an industry that impact all firms...
JAX Co. prepared a master budget for 2021 reflecting indirect material costs of $176,677 based on annual production of 135,935 widgets (the annual production is spread out equally over the twelve...
Limited partnerships must have at least three limited partners and no general partners. True/False
Access the Federation of Tax Administrators Internet site at www. taxadmin.org/state-tax-forms and indicate the titles of the following state tax forms and publications: a. Minnesota Form M-100 b....
Give an example of a bailorbailee relationship. a. Identify the bailor and the bailee in this relationship. b. Is a bailor generally liable for the negligence of a bailee?
Explain the roles of commercial banks, savings and loan associations, credit unions, and non deposit institutions in the U.S. financial system.
How did the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989 and the Federal Deposit Insurance Corporation Improvement Act of 1991 reverse some of the key features of...
What major changes did the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 make to the FDIC and the FSLIC?
An airline will purchase 2 million gallons of jet fuel in one month and hedges using heating oil futures. From historical data, the standard deviation of heating oil futures contract is sF =0.031...
A European call option for a share costs $5.00. The exercise price of the call option is $100.00. An investor buys one call and holds it until maturity: a. Under what circumstances will the holder of...
You have been asked to estimate the cost of capital for the UTX corporation. The company has 7 million shares and 150,000 bonds outstanding at par value $10,000. In addition, it has $300 million in...

If at the expiration date, the deliverable Treasury bond is selling for 101 but the Treasury bond

Question:

Step by Step Answer:

The futures price must fall to 101 Otherwise arbitrageurs would bu...View the full answer

Financial Markets And Institutions

Students also viewed these Finance questions