Laura Cervantes. Laura Cervantes is a currency speculator and she sells eight June futures contracts for 500,000 pesos at the closing price quoted here:a. What is the value of her position at maturity if the ending spot rate is $0.12007/Ps?b. What is the value of her position at maturity if the ending spot rate is $0.09804/Ps?c. What is the value of her position at maturity if the ending spot rate is $0.11009/Ps?.....a. What is the value of her position at maturity if the ending spot rate is $0.12007/Ps?The value of Amber's position is $(Round to the nearest cent. Use a minus sign if value is negative.) Data table........(Click on the icon e to import the table into a spreadsheet.)Mexican Peso (CME) – MXN 500,000, $ per MXNLifetimeMaturityOpenHighLowSettleChangeHighLowOpen InterestMarch0.109530.109880.109300.109580.110000.0977034,481.00...June0.107900.107950.107780.107730.108000.097303,405.00...Sept0.106150.106150.106100.105730.106150.099301,481.00...

Given, No. of pesos per contract = 500,000 No. of contracts = 8 Total no. of pesos = 500,000 * 8 =…

Laura Cervantes. Laura Cervantes is a currency speculator and she sells eight June futures contracts for 500,000 pesos at the closing price quoted here: a. What is the value of her position at maturity if the ending spot rate is $0.12007/Ps? b. What is the value of her position at maturity if the ending spot rate is $0.09804/Ps? c. What is the value of her position at maturity if the ending spot rate is $0.11009/Ps? .....

Laura Cervantes. Laura Cervantes is a currency speculator and she sells eight June futures contracts for 500,000 pesos at the closing price quoted here: a. What is the value of her position at maturity if the ending spot rate is $0.12007/Ps? b. What is the value of her position at maturity if the ending spot rate is $0.09804/Ps? c. What is the value of her position at maturity if the ending spot rate is $0.11009/Ps? .....

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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A copper futures contract requires the long trader to buy £ 25,000 of copper. The trader buys one November copper futures contract at $ 0.75 per pound. According to historical data, copper prices moved in the range of $ 0.53-0.87 per pound. The market is confident that this trend will continue in the future. What is the maximum loss this trader can have? Another trader sells one November copper futures contract. What is the maximum loss this short trader can have?
2.27. Trader A enters into futures contracts to buy 1 million euros for 1.1 million dollars inthree months. Trader B enters in a forward contract to do the same thing. The exchangerate (dollars per euro) declines sharply during the first two months and then increases forthe third month to close at 1.1300. Ignoring daily settlement, what is the total profit ofeach trader? When the impact of daily settlement is taken into account, which trader hasdone better?
Tony Begay at Saguaro Funds. Tony Begay, a currency trader for Chicago-based Saguaro Funds, uses the following futures quotes on the British pound (£) to speculate on the value of the pound. If Tony buys 5 June pound futures and the spot rate at maturity is $1.3980 = £1.00, what is the value of his position? If Tony sells 12 March pound futures and the spot rate at maturity is $1.4560 = £1.00, what is the value of his position? If Tony buys 3 March pound futures and the spot rate at maturity is $1.4560 = £1.00, what is the value of his position? If Tony sells 12 June pound futures and the spot rate at maturity is $1.3980 = £1.00, what is the value of his position?
Your company needs £500,000 per month. You choose to hedge half of the required amount by entering into a futures contract at $1.148/E. How much did you save by hedging if the spot price today is $1.195/£?
Suppose that you are a speculator that anticipates a depreciation of the Singapore dollar (S$). You purchase a put option contract on Singapore dollars. Each contract represents S$45,000, with a strike price of $0.77 and an option premium of $0.03 per unit. Suppose that the spot price of the Singapore dollar is $0.73 just before the expiration of the put option contract. At this time, you exercise the option, while also purchasing S$45,000 in the spot market at the current spot rate. Assume the seller, after you exercise the put option, immediately sells the S$45,000 on the spot market. Now consider this scenario from the perspective of the individual or firm that sold you the put option. Note: Assume there are no brokerage fees. Use the drop-down selections to fill Transaction Selling Price of S$ - Purchase Price of S$ + Premium Paid for Option = Net Profit the following table from the sellers perspective. Per Unit $0.73 -$0.77 $0.03 Per Contract $32,850 $26,280 $39,420
1. Suppose trader A sells a E-miniS&P 500 indexDecember 2021 expiry (ESZ1)futures contract to trader Bon May 7 , 2021. Suppose the price declines and trader A liquidates their position by buying a futures contract fivedayslateron May12, 2021. Does trader A make a profit? Does trader B have to make a loss? Explain your answer. 2. Consider a large Australian cotton farmer who has just planted her crop. Once grown, she plans to export her production to China: Suppose the Australian cotton farmer goes short on a cotton no. 2 futures contract on the ICE exchange. Go to theice.com and look up the contract. What is the contract size? Is the contract settled with physical delivery or cashsettlement?
Blossom Inc. entered into a futures contract to sell grain for $1,120 in 30 days. This contract helps the company manage its market risk by locking in the amount it will get when it sells the grain. The contracts trade on an exchange and are net settleable. The broker requires a $220 initial margin (normally a percentage of the market value of the contract or a fixed amount multiplied by the number of contracts). This amount is deposited in cash with the broker. Like the forward, the futures contract would have a zero value up front. This is a non-financial derivative because the underlying is a non-financial commodity (grain). Blossom intends to settle on a net basis. Prepare the related journal entry at the acquisition date. (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 O for the amounts. List debit entry before credit entry.) Account Titles Debit Credit
Suppose that on Monday, 7 July, you assume a long position in one December British pound futures contract at the futures price of $1.10/£. The initial margin is $2,000, and the maintenance margin is $1,500. The contract size is £125,000. Assume you do not withdraw excess money from your margin balance. All margin requirements are met with cash. The settlement prices for Monday and the next two days are shown in the following: Monday: $1.10 Tuesday: $1.15 Wednesday: $1.07 What is the balance in your margin account at the end of Wednesday? The correct answer is B. 1500 - Could you please explain why 1500 is the correct answer. a. $1,750 b. $1,500 c. $2,000 d. $-$1,000 e. $750
Going long with Mexican peso futures contract. Soledad McArthur is the chief currency trader at the Magna Carta macro hedge fund. She decides on January 15 to go long by buying Mexican peso (MXN) March and June futures currently trading at US$0.11953 and US$0.11790.a. What does it mean to go long with an MXN futures contract? What is Soledad's implied exchange rate scenario?b. Assuming that the initial margin is set at 12.5 percent of the face value of the contract, what is the amount that Soledad has to deposit in the margin account (each contract has a face value of MXN 500,000)?c. If Soledad held the March futures to maturity and the spot exchange rate on that day was US$0.11878 = MXN 1, what would be the cash gain/loss incurred by Magna Carta? Assume that the margin account remains constant during the March futures holding period and that Magna Carta's opportunity cost of capital is 10 percent.d. On January 16, the inflation forecast released by Mexican authorities points to an…
4
June 2019 Mexican peso futures contract has a price of $0.05197 per MXN. You believe the spot price in June will be 0.05831 per MXN a. What speculative position would you enter into to attempt to profit from your beliefs? O Short position O Long Position b. Calculate your anticipated profits, assuming you take a position in three contracts. (Do not round intermediate calculations. Round your answer to the nearest whole number.) Anticipated profit c. What is the size of your profit (loss) if the futures price is indeed an unbiased predictor of the future spot price and this price materializes? (A Negative value should be indicated with a minus sign. Do not round intermediate calculations. Round your answer to the nearest whole number)
Tony Begay at Saguaro Funds. Tony Begay, a currency trader for Chicago-based Saguaro Funds, uses the following futures quotes, , on the British pound (£) to speculate on the value of the pound. a. If Tony buys 5 June pound futures, and the spot rate at maturity is $1.3982 = £1.00, what is the value of her position? b. If Tony sells 12 March pound futures, and the spot rate at maturity is $1.4558 = £1.00, what is the value of her position? c. If Tony buys 3 March pound futures, and the spot rate at maturity is $1.4558 = £1.00, what is the value of her position? d. If Tony sells 12 June pound futures, and the spot rate at maturity is $1.3982 = £1.00, what is the value of her position? a. If Tony buys 5 June pound futures, and the spot rate at maturity is $1.3982/£, what is the value of her position? The value of Tony's position is $. (Round to the nearest cent. Use a minus sign if value is negative.) b. If Tony sells 12 March pound futures, and the spot rate at maturity is $1.4558/£,…

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