Based on the information provided below, estimate the total profit or loss on a position: 1. Instrument traded: Futures Contract (London Metal Exchange) 2. Underlying metal: Nickel of 99.80% purity 3. Number of instruments traded: 130 4. Position taken: short 5. Quotation: USD per tonne 6. Lot size 6 tonnes. %3D 7. Settlement type: physical 8. Futures price: 18782 9. Settlement price at the time of expiration: 18430

Based on the information provided below, estimate the total profit or loss on a position: 1. Instrument traded: Futures Contract (London Metal Exchange) 2. Underlying metal: Nickel of 99.80% purity 3. Number of instruments traded: 130 4. Position taken: short 5. Quotation: USD per tonne 6. Lot size 6 tonnes. %3D 7. Settlement type: physical 8. Futures price: 18782 9. Settlement price at the time of expiration: 18430

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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1. Complete the following tables (the example from the course): We start with the assumption that the futures price is 100$ when the transaction opens, the initial margin requirement is 5$, and the maintenance margin requirement is 3$. Table 1. Holder of long position of 10 contracts Day Beginning Funds Settlement Futures price change (5) Gain/Loss (6) Ending balance (7) (1) balance (2) deposited (3) price (4) 0 100.00 99.20 96.00 101.00 103.50 103.00 6 104.00 Table 2. Holder of short position of 10 contracts Day Funds Settlement Beginning balance (2) Futures price change (5) Gain/Loss (6) Ending balance (7) (1) deposited (3) price (4) 0 100.00 1 99.20 2 96.00 3 101.00 4 103.50 5 103.00 6 104.00 2. Suppose that an European call option on 1000 shares has the strike price 22 $/share and the premium 0.8 $/share. a) What will be the buyer's payoff if the spot price at maturity is 23.1 $/share? Draw the diagram. b) What will be the seller's (writer) payoff if the spot price at maturity is…
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On January 1, 2020, Oriole Inc. entered into a futures contract to purchase U.S. $5,390 for $5,670 Canadian in 30 days on the Futures Exchange. On January 15, the fair value of the contract was $39 (reflecting the present value of the future cash flows under the contract). Oriole Inc. was required to deposit $22 with the stockbroker as a margin. Prepare the journal entries to update the books on January 1 and 15. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)
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