If an investor buys a three-year Commonwealth Treasury bond futures contract at 7 per cent and on the delivery date the interest rate of Treasury bonds is lower than they expected at 6 per cent,they will have:

Question

Quizplus · Accepted Answer

When the interest rate drops from 7% to 6%, it means the bond value has increased. As the investor has a long position, they will make a profit on the increase in bond value, resulting in a gain on their position.

If an Investor Buys a Three-Year Commonwealth Treasury Bond Futures