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A fund manager expects to have funds to invest in three months' time and plans to buy $4 million corporate bonds, curren
Posted: Fri Jul 01, 2022 7:36 am
by answerhappygod
- A Fund Manager Expects To Have Funds To Invest In Three Months Time And Plans To Buy 4 Million Corporate Bonds Curren 1 (21.53 KiB) Viewed 32 times
A fund manager expects to have funds to invest in three months' time and plans to buy $4 million corporate bonds, currently yielding 7.00% p.a. The manager hedges their interest rate risk using three-year Treasury bond futures contracts, currently priced at 94.500. In three months time the fund manager buys $4 million corporate bonds at yield of 6.84% p.a. and closes out their futures market position at 95.250. What is the profit from closing out the futures position.