Problem:
A Coca-Cola bond futures contract settles at 105-8.
Required:
Question 1: What is the present value of the Coca-Cola futures contract?
Question 2: If the contract settles at 105-8, are current market interest rates higher or lower than the standardized rate on a futures contract? Explain.
Question 3: What is the implied annual interest rate on the futures contract?
Note: Please show how to work it out.