Answered: On March 1 a commodity's spot price is…

On March 1 a commodity's spot price is $78 and its August price is $73. Company A entered into futures contracts on M by A? O 80 O 77 none of these O 79 O 78

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

See similar textbooks

Related questions

Q: Which statement is true about the difference between futures and forward contracts?

A: The true statement about the difference between future and forward contracts is:3. Futures contracts…

Q: A one-year gold futures contract is selling for $1,247. Spot gold prices are $1,200 and the one-year…

A: The spot price and the risk-free rate can be used to compute the future price. If the calculated…

Q: The theoretical futures price of a Treasury bond futures contract calculated using the formula:\\n\…

A: Theoretical futures price: The price of a futures contract calculated based on the current value of…

Q: Mr. Saso holds a short position in euros through five March futures contracts, with each contract…

A: Short position means sell now shares and buy them in future and settle the deal. Contract size =…

Q: You entered into a futures contract to buy €62,500 at $1.20/€ yesterday. Your initial margin was…

A: Initial price= $1.20Future contract size= 62,500Initial margin = $4,200Maintenance margin =…

Q: A company enters a short futures contract to sell 50,000 units of a commodity for 77 cents per unit.…

A: Maintenance margin is the minimum amount a person should maintain in his margin account, if margin…

Q: Demonstrate howa Margin Account operates for both the Long and the Short futures position using the…

A: Margin account: It is a type of brokerage account in which investors can purchase the securities by…

Q: The following are call option premiums and futures settlement prices for ICE cotton. These prices…

A: Spot price is the current price of the stock, whereas strike price is the predetermined price of the…

Q: On 1st of March the crude oil’s spot price is $50 and its August futures price is $48. On 1st of…

A: Spot price as on 1st March= $50 August futures price= $48 Spot price as on 1st July= $62 August…

Q: our firm is an Italian exporter of bicycles. You have sold an order to a British firm for £1,000,000…

A: GBP future contract to sold = Receive/contract size = 1,000,000/10,000 = 100 EUR future contract to…

Q: If KLSE-CI futures (.e. FKLI) are at 1160, the cash price (KLSE-CI) is 1155, and the fair value…

A: Basis :- In Commodity market, basis is the difference between cash price of commodity and the future…

Q: On June 6, 2021, firm ABC has a contract to sell 1,000 barrels of crude oil on November 17, 2021.…

A: A hedge is a financial strategy or transaction used by individuals or businesses to mitigate or…

Q: Yesterday, you entered into a futures contract to sell €75,000 at $1.79 per €. Your initial…

A: Futures contracts are agreements where two parties commit to buying or selling an asset at a…

Q: An investor holds a short position in four July crude palm oil futures contracts. When the contract…

A: A futures contract is a derivative contract wherein a contract based upon an underlying asset is…

Q: y date you must: a. buy one May corn futures contract. b. buy two April corn futures contract.…

A: Futures do not operate like this. You will be exercised until the futures contract ends, whether you…

Q: On November 21, you bought one December maturity S&P 500 index futures contract at the futures price…

A: The answer is as fallows

Q: On March 1 a commodity's spot price is $400 and its June futures price is $416. On May 1 the spot…

A: Hedging is the way to cushion against possible loss in financial transactions. This is mainly used…

Q: What is your profit or loss on the trade? See the notes for the multiplier on this contract. O…

A: Future contracts are settled on the basis of price difference between the future and spot position…

Q: A trader enters into two short cotton futures contracts when the futures price is 80 cents per…

A: A trader enters into two short cotton futures contracts at a contracted price. The gain/loss for the…

Q: Assume the Eurodollar futures price at time t0 is 93.83 and the contract expires in 3 months time a.…

A: 3-month forward rate implied by the futures price:Forward Rate = 100 - Futures PriceThe repayment…

Q: H4. A company buys a futures contract on 10,000 units of a commodity for $0.67 per unit. The initial…

A: When a trader trades in futures contracts he has to maintain two margins one initial margin and the…

Q: Assume that today the euro futures contracts with a September 15th delivery date are priced at…

A: Foreign Exchange is currency exchange. It is the rate of currency which between the two countries…

Q: A company enters into a short futures contract to sell 25,000 units of a commodity for 70 cents per…

A: Number of Unit = n = 25,000 unitsSelling price per unit = s = 70 cents or $0.70Initial Margin = im =…

Q: Use the following corn futures quotes (priced in cents): Corn 5,000 bushels Contract Month Mar May…

A: A future contract is a written agreement to purchase or sell a specific good, service, or group of…

Q: Assume today's settlement price on a CME EUR futures contract is $1.3166/EUR. You have a long…

A: Given:Initial settlement price = $1.3166/EURInitial performance bond account balance =…

Q: On November 21, you bought one December maturity S&P 500 index futures contract at the futures price…

A: Given Information: Future Price of one contract = $2057. Future Price on December 8 = $2179…

Q: Use the futures contract data in the following table to answer the question. Open High Low…

A: Futures contracts are derivative instruments. These instruments are used to hedge the adverse…

Q: A company enters into a short futures contract to sell 10,000 units of a commodity for $0.5 per…

A: The objective of this question is to determine at what futures price the company will receive a…

Q: An investor has a short position in 10 futures contracts for which the price increases from $85 to…

A: Future contracts are a part of derivatives where the value of contract is derived from underlying…

Q: You are long 10 gold futures contracts, established at an initial settle price of $1,580 per ounce,…

A: Profit= Number of contracts Ounces per contract (Closing Price - Opening Price)

Q: It is now January. The current annual interest rate is 6.6%. The June futures price for gold is…

A: In financial markets, the parity relationship between spot prices and futures prices helps determine…

Q: On a particular day, the S&P 500 futures settlement price was 899.30. You buy one contract at the…

A: Future contract refers to the legal agreement that is used for buying and selling the commodity…

Q: The FTSE100 on August 1, 2021 trades at 6250 points. The 6-month UK T-bill rate (in discrete…

A: The current Spot price is 6250 pointsThe 6-month UK T-bill rate is 0.50%The future price is…

Q: Current futures prices ($/barrel): Oct 70.01; Dec 69.78; Mar 69.40. Contract size: 1000 barrels…

A: Put has value when expiration prices are below the strike price but no value if prices are above the…

Q: price closes today at $1.25. How much have you n Select one: O a You have made $2.500.00. O b You…

A: Given information : Euros bought € 82,500.00 Purchase price of euro per dollar $…

Q: Use the following information to answer Questions 8-9: Suppose that the June 2023 Mexican peso…

A: Futures contract:Futures contract is a standardized contract traded on an exchange, such as the…

Q: A trader takes a view that March KLSE CI futures which are currently trading at 1188.60 are about to…

A: Current trading price is 1188.60 Investors Vie is bearishness in stock Contract size is RM 50 per…

Q: A trader has decided to roll a short hedge forward until December to hedge a long position in corn…

A: A short hedge is an investment technique that is designed to guard (hedge) against the possibility…

Q: The Garcia Insurance Company sold short S&P 500 stock index futures that specified an index of…

A: The income, costs, and expenses incurred during a certain period of time are summarized in a profit…

Q: Tony Begay at Saguaro Funds. Tony Begay, a currency trader for Chicago-based Saguaro Funds, uses the…

A: a. Number of contracts bought = 5 Spot rate at maturity =$1.3981 /£1Forward rate = $1.4162/£The…

Q: Given the following information for December 24 corn futures, identify the "In the Money", "At The…

A: Options in finance are derivative instruments that give the holder the right to buy or sell a…

Q: he IMM index price in yesterday's newspaper for a September Eurodollar futures contract is 95.23.…

A: Euro-dollars future is derivative contract that is traded on the stock exchange and related to the…

Q: Prices of a futures contract for 5 consecutive trading-days are provided in the table below. The…

A: Futures are standarized contracts used for hedging purposes.In futures , there is mark to market…

Q: company enters into 2 long futures contracts on a commodity for 200 cents per unit. Each contract is…

A: When trading in the market there are margins required by the broker to keep positions in the market.

Q: A trader has decided to roll a short hedge forward until December to hedge a long position in corn…

A: A short hedge is that investment strategy that protects traders or investors against the risk of…

Q: Assume that the Euro (EUR) futures price for September is USD 1.90. Given that 115,000 units are in…

A: The Euro futures price is USD 1.90, and there are 115,000 units in a Euro futures contract. To find…

Q: The following price quotations are for exchange-listed options on Primo Corporation common stock.…

A: Options are the derivative instruments that provide the investor or holder a right to purchase or…

Q: Assume today's settlement price on a CME EUR futures contract is $1.3174/EUR. You have a short…

A: In the futures there will be late delivery of contracts after a specified period and there is market…

Q: futures price is 49,100 on March 10. It is 52,300 on March 11. It is 47,700 on March 12. What is the…

A: A margin account is a specific kind of brokerage account that enables a buyer to borrow money from…

Question

gs
On March 1 a commodity's spot price is $78 and its August futures price is $79. On July 1 the spot price is $74 and the August futures
price is $73. Company A entered into futures contracts on March 1 and closed out its position on July 1. What is the effective price paid
by A?
O 80
O 77
none of these
O 79
O 78
495864/external tools/34219

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Copper Futures Contracts Trader Long Short Harvest Green Inc. 1,000 0 Raydeon Systems Co. 3,000 1,000 CALPERS 2,000 0 SunTrust Trading Division 2,000 2,000 Some guy named Joe Co. 0 8,000 UTA Inc. 3,000 0 The table above reflects the number of contracts traded on copper futures. What is the trading volume of copper futures?
Look at the futures listings for corn in Figure 2.11. Suppose you buy one contract for December 2020 delivery at the closing price. Required: If the contract closes in December at a price of $4.00 per bushel, what will be your profit or loss? (Each contract calls for delivery of 5,000 bushels.) (Round your answer to 2 decimal places.)
We define basis as futures price minus cash price. In general, what is the expected sign of the basis one month prior to expiry for oil sold on the spot market at the futures contract’s delivery location? (i) positive (ii) negative (iii) zero
20. A futures contract a. is an agreement to buy or sell a specified amount of an asset at the spot price on the expiration date of the contract. b. is an agreement to buy or sell a specified amount of an asset at a predetermined price on the epiration date of the contract. c. gives the buyer the right,, but not the obligation, to buy an asset some time in the future. d. is a contract to be signed in the futurue by the buyer and the seller of the commodity e. none of these.
Assume today's settlement price on a CME EUR futures contract is $1.3170/EUR. You have a long position in one contract. Your performance bond account currently has a balance of $3,200. The next three days' settlement prices are $1.3156, $1.3163, and $1.3079. Calculate the changes in the performance bond account from daily marking-to-market and the balance of the performance bond account after the third day. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Changes in the performance bond account I
On July 2, the two-month futures rate of the Mexican peso contained a 2 percent discount (unannualized). The spot rate of the Mexican peso was $0.051. There was a call option on pesos with an exercise price that was equal to the spot rate. There was also a put option on pesos with an exercise price equal to the spot rate. The premium on each of these options was 4 percent of the spot rate at that time. On September 2, the option expired. You exercised the option on this date if it was feasible to do so. On September 2, the spot rate of the Mexican peso was $0.054. a. What was your net profit per unit you had purchased the call option? Use a minus sign to enter loss values, if any. Round your answer to four decimal places. $ b. What was your net profit per unit $ c. What was your net profit per unit $ d. What was your net profit per unit $ you had purchased the put option? Use a minus sign to enter loss values, if any. Round your answer to four decimal places. you had purchased a…
The following are call option premiums and futures settlement prices for ICE cotton. These prices were quoted on December 16th, 200X. These prices are used in problems 25 through 29 (recopied here for your convenience). Strike Price (cents/lb)_ 48.00 49.00 50.00 51.00 52.00 53.00 Futures close 6 18 12 24 Mar-OX none of the above. 2.56 1.98 1.48 1.09 .78 .55 49.60 May-OX QUESTION - Based on the above price data, there are. represented among both the Mar-OX and May-OX contracts. 6.14 5.33 4.59 3.92 3.31 2.74 53.69 individual options contracts being
Marks Insurance Company sold S&P 500 stock index futures that specified an index of 1690. When the position was closed out, the index specified by the futures contract was 1720. Determine the profit or loss, ignoring transaction costs.
An investor takes a long position in 2 November gold futures contracts on July 10. The contract size is 100 oz. The current gold futures price is US$1900. The initial margin requirement is US$5,000 per contract and maintenance margin is US$4,500/contract.The following table shows the futures price at the close of the following dates: Day Date Price 1 10-Jul 1896.00 2 11-Jul 1894.00 3 12-Jul 1901.00 4 13-Jul 1903.00 please choose the correct answers . $1800 can be withdrawn from the account at the close of Day 3 b. You will get a margin call of $1500 at the close on Day 2 c. $2000 can be withdrawn from the account at the close of Day 3 d. $1400 can be withdrawn from the account at the close of Day 3 e. $1500 can be withdrawn from the account at the close of Day 3 f. You will get a margin call of $1800 at the close on Day 2 g. You will get a margin call of $1200 at the close on Day 2 h. You will not…
On the 1st of March, a commodity’s spot price is $60 and its futures contract price with maturity in August is $59. On the 1st of July, the commodity spot price is $64 and its futures contract price with maturity in August is $63.50. A company entered into the futures contracts on 1st of March to hedge its purchase of the commodity on July 1. It closed out its position on July 1. What is the effective price (after taking account of hedging) paid by the company? $60.50 $61.50 $63.50 $59.50
A trader in the United States has a portfolio of derivatives on the Australian dollar with a delta of 456. The USD and AUD risk free interest rates are 5% and 8%. What position in a one-year futures contract on the Australian dollar creates a delta-neutral position? Question 12 options: Long 469.9 Short 469.9 Short 310 None of the above
If the price of a T-Bill futures contract has an FIMM price of 96.00 at maturity. If a short delivers the required cash T-Bill into one maturing futures contract, the short will receive none of these other answers are correct $96,000 $990,000 $99,000 $960,000

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS