Questions from General Investment

Q: A one-year gold futures contract is selling for $1

A one-year gold futures contract is selling for $1,558. Spot gold prices are $1,500 and the one-year risk-free rate is 2%. a. According to spot-futures parity, what should be the futures price? b. W...

Q: You purchase a Treasury-bond futures contract with an initial margin

You purchase a Treasury-bond futures contract with an initial margin requirement of 15% and a futures price of $115,098. The contract is traded on a $100,000 underlying par value bond. If the futures...

Q: A newly issued bond paying a semiannual coupon has the following characteristics

A newly issued bond paying a semiannual coupon has the following characteristics: a. Calculate modified duration using the information above. b. Explain why modified duration is a better measure than...

Q: Phoebe Black’s investment club wants to buy the stock of either NewSoft

Phoebe Black’s investment club wants to buy the stock of either NewSoft, Inc. or Capital Corp. In this connection, Black prepared the following table. You have been asked to help her...

Q: a. Turn to Figure 17.1 and locate the E

a. Turn to Figure 17.1 and locate the E-Mini contract on the Standard & Poor’s 500 Index. If the margin requirement is 10% of the futures price times the multiplier of $50, how much must you deposit w...

Q: Why might individuals purchase futures contracts rather than the underlying asset?

Why might individuals purchase futures contracts rather than the underlying asset?

Q: What is the difference in cash flow between short-selling an

What is the difference in cash flow between short-selling an asset and entering a short futures position?

Q: Suppose the value of the S&P 500 Stock Index is

Suppose the value of the S&P 500 Stock Index is currently $3,000. a. If the one-year T-bill rate is 3% and the expected dividend yield on the S&P 500 is 2%, what should the one-year maturity futures...

Q: It is now January. The current annual interest rate is 3

It is now January. The current annual interest rate is 3% . The June futures price for gold is $1,246.30, while the December futures price is $1,251. Is there an arbitrage opportunity here? If so, how...

Q: A household savings-account spreadsheet shows the following entries for the

A household savings-account spreadsheet shows the following entries for the first day of each month: Use the Excel function XIRR to calculate the monthly dollar-weighted average return for this perio...