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Assignment X2 question 2.1(i)

Discussion in 'SA7' started by no_name, Sep 3, 2020.

  1. no_name

    no_name Member

    Hi - sorry if this is a silly question, but when calculating the number of bond future contracts to buy, why does the answer use 1.162 rather than the index value of 116.2?
     
    no_name, Sep 3, 2020
    #1
  2. Colin McKee

    Colin McKee ActEd Tutor Staff Member

    It does look odd. Usually bonds are quoted as a price per 100 nominal, rather than a price per £1 nominal. So 116, rather than 1.16. But when you want to work out the market value of a certain nominal of bond, its 100,000 * 1.16 or 100,000 * 116 / 100.
     
    Colin McKee, Sep 4, 2020
    #2
    no_name likes this.
  3. no_name

    no_name Member

    that makes sense - thank you Colin!
     
    no_name, Sep 5, 2020
    #3

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