Evan purchased a futures contract on Treasury bonds at a price of 102-12. Two months later, Evan sells the same futures contract in order to close out the position. At that time, the futures contract specifies 103-15. What is Evan's nominal profit? The par value of the futures contract is $100,000.

Question

Quizplus · Accepted Answer

Evan's nominal profit is calculated based on the difference between the selling price and the buying price of the futures contract, adjusted for the par value of the contract. The buying price is 102-12, which translates to 102 + 12/32 = 102.375% of the par value. The selling price is 103-15, which translates to 103 + 15/32 = 103.46875% of the par value. The difference in price percentages is 103.46875% - 102.375% = 1.09375%. Applying this percentage to the par value of $100,000 gives a nominal profit of $1,093.75.

Evan Purchased a Futures Contract on Treasury Bonds at a Price