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Refer to Table 10-4.

a. What was the settlement price on the March 2020 U.S. Treasury Bonds futures contract on March 13, 2020? (Do not round your intermediate calculations. Round your percentage answer to 3 decimal places. (e.g., 32.161))

b. How many March 2020 5-Year U.S. Treasury Notes futures contracts traded on March 13, 2020?

c. What is the face value of a Canadian Dollar currency futures contract on March 13, 2020?

d. What was the settlement price on the March 2020 E-Mini Nasdaq-100 futures contract on March 13, 2020? (Round your answer to 2 decimal places. (e.g., 32.16))

**TABLE 10-4 Futures Quote, March 13, 2020**

**INTEREST RATE FUTURES**

| Expiration | Last |
|------------|-------|
| U.S. Treasury Bonds ($100,000; pts 32nds of 100%) | |
| Mar 2020 | 178/08|
| Jun 2020 | 176'15|

| 10-Year U.S. Treasury Notes ($100,000; pts 32nds +128ths of 100%) | |
| Mar 2020 | 136'005|
| Jun 2020 | 136'060|

| 5-Year U.S. Treasury Notes ($100,000: pts 32nds + 128ths of 100%) | |
| Mar 2020 | 123′165|
| Jun 2020 | 124'055|

| 2-Year U.S. Treasury Notes ($100,000; pts 32nds + 128ths of 100%) | |
| Jun 2020 | 110'047|
| Sep 2020 | 110'100|

**CURRENCY FUTURES**

| Prior | Change | Settle | Open | High | Low | Volume|
|--------|--------|--------|-------|--------|--------|-------|
| Japanese Yen | Mar 2020 | 0.00951| 0.00954| 0.00957| 0.00922| 0.00925| -0.00025|
| | Apr 2020 | 0.00927| -0.00026| 0.00952| 0.00957| 0.00957| 0.00925|
| Canadian Dollar | Mar 2020 | 0.72360| 0.00145| 0.72215| 0.71825| 0.72555| 0.71435|
| | Apr 2020 | 0.00070| 0.72215| 0.71940| 0.72340| 0.72285| 0.71600|
| British Pound | Mar 2020 | 1.23090| 1.22590| -0.02730| 1.25820| 1.25730| -0.03040|
| | Apr 2020 | 1.25870| 1.26250| 1.25450| 1.26230| 1.22830| 1.22830|
| Euro | Mar 2020 | 1.10550| 1.11185| 1.11500| -0.00595| 1.11780| -0.00740|
| | Apr 2020 | 1.11890| 1.11690| 1.12230| 1.11880| 1.12430| 1.10750|

**INDEX FUTURES**

| Expiration | Last | Open | High | Low | Volume|
|------------|-------|-------|--------|--------|-------|
| E-mini Dow Index ($5 x DJIA Index) | Mar 2020 | 22,835 | 1,750 | 230,169| 21,085|
| | Jun 2020 | 23,008 | 23,147 | 20,388 | 20,944| 22,830|
| E-Mini S&P 500 Index ($50 x S&P 500 Index) | Mar 2020 | 2,664.75| 2,652.75| 195.75 | 2,469.00| 2,689.75|
| | Jun 2020 | 2,707.75| 2,393.50| 3,295,273|
| E-Mini Nasdaq-100 Index ($20 x Nasdaq-100 Index) | Mar 2020 | 7,823.00| 7,810.25| 607.75 | 7,215.25| 7,910.00| 7,978.00| 6,942.50|
| | Jun 2020 | 7,201.75| 7,891.00| 7,961.00| 6,925.25| 578,813|
| E-Mini Russell 2000 Index ($50 x Russell 2000 Index) | Mar 2020 | 1199,70| 1191.20| 1.26250| 1.22590| 1.26230|
| | Jun 2020 | 1109,90| 1197.80| 1217:30| 1070.50| 85.70| 1105.50|

Answer :

Final answer:

To calculate the present value of a bond, we discount its future cash flows at the current interest rate. The present value equals the sum of these discounted cash flows. If the discount rate rises, the present value of the bond decreases accordingly.

Explanation:

When we calculate the present value of a bond, we are determining what future cash flows are worth in today's dollars. For a simple two-year bond with a face value of $3,000 and an 8% interest rate, the bond will pay $240 in interest each year.

Using a discount rate equal to the bond's interest rate (8%), the present value of the first year's interest payment is $240 / (1 + 0.08) or $222.22, and the present value of the second year's payment (interest plus principal) is $3,240 / (1 + 0.08)^2 or $2,777.78, making the total present value $3,000.

If the discount rate increases to 11%, the present value of these same cash flows decreases because they are being discounted at a higher rate. The first year's payment's present value is then $240 / (1 + 0.11) or $216.22, and the second year's payment's present value is $3,240 / (1 + 0.11)^2 or $2,625.23, leading to a decrease in the bond's total present value below $3,000.

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