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You purchase a Treasury-bond futures contract with an initial margin requirement of 15% and a futures price of $114,550. The contract is traded on a $100,000 underlying par value bond. If the futures price falls to $107,300, what will be the percentage loss on your position

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abiolataiwo2015

Answer:

-42%

Explanation:

Calculation for the percentage loss on your position

Based on the information given the first step is to find the margin

Margin = 114,550× .15 = 17,182.5

Second step is to calculate for the percentage of the loss

Loss % = (107,300 × 114,550)/17,182.5

Loss % =-$7,250/17,182.5

Loss% = -0.45×100

Loss%=-42%

Therefore the percentage loss on your position will be -42%

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