Conyers Bank holds U.S.Treasury bonds with a book value of $30 million.However, the U.S.Treasury bonds currently are worth $28,387,500. The portfolio manager for Conyers Bank wishes to sell the entire issue of Treasury bonds at a current price of 87-05/32^nds.What will be the gain or loss on the cash position since the futures contract was placed? (That is, since the bonds were valued at $28,387,500.) A)Loss of $3,834,375. B)Loss of $3,853,125. C)Gain of $2,240,625. D)Gain of $3,853,125. E)Loss of $2,240,625.

Question

Quizplus · Accepted Answer

The correct answer involves calculating the difference between the book value or the previously valued amount of the U.S. Treasury bonds and their current worth. Since the bonds were valued at $28,387,500 and are now being sold for less, this results in a loss. The specific amount of loss or gain would depend on the current selling price, which isn't directly provided in the choices. However, the choice indicating a loss reflects the decrease in value from the previously valued amount.

Conyers Bank Holds U