What is the difference between the cash price and the quoted price for a treasury bond?

What is the difference between the cash price and the quoted price for a treasury bond?

Answer: Cash includes faec value

What is the wild card play for holders of short positions in treasury bond futures?

What is the wild card play for holders of short positions in treasury bond futures?

Answer: holders can announce their delivery or delay

The short term risk free rate usually used by derivatives traders in the over the counter market is

The short term risk free rate usually used by derivatives traders in the over the counter market is

Answer: the LIBOR rate

You are the treasurer for a company that manufactures gold jewelry. All of your competitors hedge the price of gold. You anticipate that the cost of gold is likely to rise in the next year. What action should you recommend?

You are the treasurer for a company that manufactures gold jewelry. All of your competitors hedge the price of gold. You anticipate that the cost of gold is likely to rise in the next year. What action should you recommend?

Answer: Hedge your purchase of gold using LONG futures contracts

You instruct your broker to enter into one long futures contract. At the same time a trader in New York instructs her broker to enter into one short futures contract. Which of the following statements is most correct?

You instruct your broker to enter into one long futures contract. At the same time a trader in New York instructs her broker to enter into one short futures contract. Which of the following statements is most correct?

Answer: Open interest is increased by 1

A company enters into a long futures contract for 1000 barrels of oil for $75 per barrel. The initial margin is $6,000 and the maintenance margin is $4,000. What oil price will allow $5000 to be drawn from the account?

A company enters into a long futures contract for 1000 barrels of oil for $75 per barrel. The initial margin is $6,000 and the maintenance margin is $4,000. What oil price will allow $5000 to be drawn from the account?

Answer:

5000/1000=5
75+5=$80.00

A company enters into a short futures contract for 50,000 pounds of cotton for 260 cents per pound. The initial margin is $4000 and the maintenance margin is $3000. What is the futures price ABOVE which there will be a margin call?

A company enters into a short futures contract for 50,000 pounds of cotton for 260 cents per pound. The initial margin is $4000 and the maintenance margin is $3000. What is the futures price ABOVE which there will be a margin call?

Answer:

3000-4000=-1000
-1000/50000=$-.02
260+2=262