Answer Happy

Question 4. (20 points) A Treasury bond futures contract settles
at 98'8.
a. What is the present value of the futures contract in
dollars?
b. If the contract settles at 98'8, are current market interest
rates higher or lower than the standardized rate on a futures
contract? Explain.
c. Calculate the implied annual interest rate on the futures
contract?
d. Calculate the new value of the futures contract if interest
rates increase by 1 percentage point annually. e. Calculate your
profit or loss if you sold a futures contract at 98-8 and purchased
an offsetting contract when rates increased by 1 percentage point
annually.