Question: In April, Jim Johnson forecasts that interest rates will decrease over the next month. He purchases a T-bond futures contract with a June settlement date

In April, Jim Johnson forecasts that interest rates will decrease over the next month. He purchases a T-bond futures contract with a June settlement date at 110.00. He pays an initial margin of $5,000 for the contract. In June, he closes out his position by selling a T-bond futures contract with a June settlement at 112.00. Calculate Jim's rate of return.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

1). A). In February, Dan Allen forecasts that interest rates will decrease over the next month. If his expectation is correct, the market value of Treasury bonds should increase. Allen calls a broker...

BOND EXERCISES 01 1. BOND REFUNDING. POTOTAN NATIONAL BANK wants to call its $100 million, 10 % percent, 20- year coupon bonds which it issued exactly five years ago and replace these with P100...

Looking for assistance in Finance HW..... I ONLY Need the FORMULASin the function ribbon (for the answers that I already have, which are attached below) Please advise if you can assist and provide...

Compare and contrast the exercise procedure for stock options with that for index options. What major advantages does exercising an index option have over exercising a stock option?( refer attached...

in order to answer the explain the questions refer to the article below (5 pt.) Explain why the market for WTI crude oil can be viewed as a "perfectly competitive market." How is the price of crude...

QUESTIONS : (5 pt.) Explain why the market for WTI crude oil can be viewed as a "perfectly competitive market." How is the price of crude oil determined? Are there a large number of buyers and...

I need help for those question . E4.16 E18.4 E19.7 P22.4 E23.4 E18.10 E22.10 CHAPTER 4 EXERCISES: SET B E4-1B The trial balance columns of the worksheet for Lamar Company at June 30, 2017, are as...

I need a step by step solutions for the 10 problems in the excel file. The correct answers are provided I only need the solutions steps. Subject is Finance (options valuation) On March 2, a Treasury...

Please, I need help with the calculations for the following 25 problems in the "final" tab of the workbook before 9pm CST. FINC 340 Quizzes 1 2 Derivatives can be strictly defined as Financial...

Please make it organize thank you. 680 Chapter 13 10. In which of the following instances would the holder of the instrument recognizes gain when the market rate or price increases? a. Futures...

show that Cmd n+2 Che prime T 4Ccn-))! +1)+n = 0 mod d ncnt2)

NSA Company produces baseball bats. Each bat requires 3 pounds of aluminum alloy. Management predicts that 8,000 bats and 15,000 pounds of aluminum alloy will be in inventory on March 31 of the...

Sold 2 2 robots for $ 8 2 5 0 each on account, terms 2 / 1 0 , n / 3 0 , FOB Shipping Point, the company uses FIFO to find the cost of goods sold. Record the sales revenue first. I have tried 1 0 1 ,...

A company is preparing completing their Cash Budget. The following data has been prepared for cash receipts and payments. January February March Cash receipts $1,061,200 $1,182,400 $1,091,700 Cash...