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Interest Rate Futures Contracts 3 Finance Articles | August 17 adidas prophere sale , 2010
After the long bond contract, you can trade contracts for T-notes in the 10-year, 5-year and 2-year category.The 10-year and 5-year notes are very similar to the long bonds. The contracts are for $100...

After the long bond contract, you can trade contracts for T-notes in the 10-year, 5-year and 2-year category.

The 10-year and 5-year notes are very similar to the long bonds. The contracts are for $100,000 and quoted in fractions of par value. One tick is 132 of a full point, or $31.25.

However, the exchanges allow the 10-year to be traded in half-ticks, which doesn't really make sense because the word tick is supposed to represent the minimum at which a futures contract can move. However, that's the way it's done.

So one half-tick is worth $15.625. Thus, you can see such quotes as 111'285, meaning that it's at 111'28 and a half.

For the 5-note futures contracts, the standard of $100,000 per contract quoted in fractions of par value with one tick being 132 of a full point ($1000) is the same.

However, on the 5-note they allow quarter ticks. So the contract can move just .2532 or $7.8125.

The two-year note contract is different, however, Its contract value is $200,000, also quoted in fractions of par. It also allows quarter points, which are therefore worth $15.625.

One apparent reason for this disparity is that the United States government issues a lot of debt with a two-year maturity, so it is commonly bought and held. Therefore, the Chicago Board of Trade figured this contract would be used by commercial financial institutions to hedge their portfolios of 2-year T-notes. By making the contracts $200,000, this allows these institutions to save money on commissions, by allowing for economies of scale. Of course, it does make it harder for ordinary traders, especially small ones, to trade this type of contract.

Eurodollar futures represent savings certificates on deposit in commercial banks outside the United States, denominated in U.S. dollars. They have a term of three months, and the rate is based on the London InterBank Offered Rate commonly known as LIBOR.

A Eurodollars futures contract repres