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Problem 3. A Treasury bond futures contract settles at 105-8. a. What is the present value of the futures contract?

Problem 3.   A Treasury bond futures contract settles at 105-8.  
a.  What is the present value of the futures contract?
b.  If the contract settles at 105-8, are current market interest rates higher or lower than the standardized rate on a futures contract?  Explain.
c.  What is 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 105-8 and purchased an offsetting contract when rates increased by 1 percentage point annually.
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