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Hi, John
The requirement if the interest rate increase or decrease by 0.9% when “investing” a sum.
So traditionally an increase in the interest rate would be offset by a loss in the futures market and vice versaWhat if the requirement stated an increase of 0.2% or fall by 0.9%
In this case we have gain on futures market as well on 0.2% increase in interest rate
hence, confirming my understanding that this could happen as well, that we have a gain in futures market and as well normally?
Yes, that can and would happen (but, of course, the net return would stay at $732,800 or 4.58%).
thanks a lot, u might have saved me from a panic attack if the examiner sets out a question like this in June
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