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Calculate how much a futures trader who enters into a 90-day bank bill futures contract on...

Question:

Calculate how much a futures trader who enters into a 90-day bank bill futures contract on September 20 with a reported price of $93.25 will need to pay on settlement date (September 30), if the face value of the underlying bill is $1,000,000.

A. $857,310.63

B. $983,628.65

C. $984,822.93

D. $998,338.38

Contract:

A contract is a kind of agreement that becomes a contract after fulfilling certain conditions of the contract. The contract must be formed for a legal or lawful purpose. In case of breach of a contract, the person who breaches the contract is liable to be punished.

Answer and Explanation: 1

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The correct answer is B. $983,628.65

{eq}\begin{align*} {\rm\text{Price of underlying bill}} &= \frac{{{\rm\text{Value of bills}} \times...

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