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Item $4$

Problem $10-5($LG $10-2)$

Dudley Savings Bank wishes to take a position in Treasury bond futures contracts, which currently have a quote of $119100.$ Dudley Savings thinks interest rates will go down over the period of investment. The face value of the bond underlying the futures contract is $$100,000.$

Should the bank go long or short on the futures contracts?

Given your answer to part $($a$),$ calculate the net profit to Dudley Savings Bank if the price of the futures contracts increases to $119210.$

Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to $2$ decimal places. $($e$.$g$.,32\mathrm{.}16)$

Given your answer to part $($a$),$ calculate the net profit to Dudley Savings Bank if the price of the futures contracts decreases to $118270.$

Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to $2$ decimal places. $($e$.$g$.,32\mathrm{.}16)$