Consider the hypothetical listing below for 10-year Treasury note futures on the Chicago Board of Trade. One

Question:

Consider the hypothetical listing below for 10-year Treasury note futures on the Chicago Board of Trade. One futures contract for Treasury notes = $100,000 face value of 10-year 6% notes.

Month Last Chg Open High Low Openint 564,322 2,380,328 118,728 Volume Dec 2018 130.500 0.301 130.266 130.752 130.266 128.950 Mar 2019 129.250 0.301 129.000 129.500 4,325

a. If today you bought two contracts expiring in December 2018, how much would you pay?

b. What does the "OpenInt" on a futures contract mean? What is the OpenInt on the contract expiring in March 2019?

c. If you were a speculator who expected interest rates to fall, would you buy or sell these futures contracts? Briefly explain.

d. Suppose you sell the December futures contract, and one day later, the Chicago Board of Trade informs you that it has credited funds to your margin account. What happened to interest rates during that day? Briefly explain.

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...