INVESTMENTS-CONNECT PLUS ACCESS
11th Edition
ISBN: 2810022611546
Author: Bodie
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 17PS
Summary Introduction
Introduction: Future contract is a contract between buyer and seller where they are ready to buy and sell a primary stock at a fixed price in the future date. In a future contract, a trader can hold a long position as well as short position.
To calculate: Profit on the contract.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Table 2.7
Corn futures prices
on the Chicago
Mercantile Exchange,
January 3, 2019
Maturity Last
Mar-19
May-19
Jul-19
Sep-19
Dec-19
Mar-20
Change High
3.8025
0.7500 3.8075 3.7975
3.8800
0.5000 3.8800
3.8750
3.9500
0.2500 3.9525
3.9450
3.9700
0.0000 3.9700
3.9650
4.0075 -0.5000 4.0100
4.0025
4.0975 0.0000 4.1000 4.0950
Low
Source: www.cmegroup.com.
Suppose you sell six September 2020 palladium futures contracts this day at the last
price of the day. Use Table 23.1.
a. What will your profit or loss be if palladium prices turn out to be $2,034.50 per ounce
at expiration? (Do not round intermediate calculations and enter your answer as a
positive value rounded to 2 decimal places, e.g., 32.16.)
b. What will your profit or loss be if palladium prices are $1,977.50 per ounce at
expiration? (Do not round intermediate calculations and enter your answer as a
positive value rounded to the nearest whole number, e.g., 32.)
a.
Loss
b.
Profit
Answer is not complete.
6,200
Suppose we wish to borrow $10 million for 91 days beginning next June, and that the quoted Eurodollar futures price is 93.23.
What 3-month LIBOR rate is implied by this price?
How much will be needed to repay the loan? Show work and discuss result.
Chapter 2 Solutions
INVESTMENTS-CONNECT PLUS ACCESS
Ch. 2 - Prob. 1PSCh. 2 - Prob. 2PSCh. 2 - Prob. 3PSCh. 2 - Prob. 4PSCh. 2 - Prob. 5PSCh. 2 - Prob. 6PSCh. 2 - Prob. 7PSCh. 2 - Prob. 8PSCh. 2 - Prob. 9PSCh. 2 - Prob. 10PS
Ch. 2 - Prob. 11PSCh. 2 - Prob. 12PSCh. 2 - Prob. 13PSCh. 2 - Prob. 14PSCh. 2 - Prob. 15PSCh. 2 - Prob. 16PSCh. 2 - Prob. 17PSCh. 2 - Prob. 18PSCh. 2 - Prob. 19PSCh. 2 - Prob. 20PSCh. 2 - Prob. 21PSCh. 2 - Prob. 22PSCh. 2 - Prob. 1CPCh. 2 - Prob. 2CPCh. 2 - Prob. 3CPCh. 2 - Prob. 4CPCh. 2 - Prob. 5CP
Knowledge Booster
Similar questions
- Look at the futures listings for the corn contract in Table 2.7.Suppose you buy one contract for September 2019 delivery. If the contract closes in September at a level of 4.36, what will your profit be? (Round your answer to 2 decimal places.)arrow_forwardSuppose the September Eurodollar futures contract has a price of 96.4. You plan to borrow $50m for 3 months in September at LIBOR, and you intend to use the Eurodollar contract to hedge your borrowing rate. a. What rate can you secure? b. Will you be long or short the Eurodollar contract? c. How many contracts will you enter into? d. Assuming the true 3-month LIBOR is 1% in September, what is the settlement in dollars at expiration of the futures contract? (For purposes of this question, ignore daily marking-to-market on the futures contract.)arrow_forwardJune 2021 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. MXN500,000 is the contract size of one MXN contract. Required: What speculative position would you enter into to attempt to profit from your beliefs? Calculate your anticipated profits, assuming you take a position in three contracts. 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?arrow_forward
- Please answer the next question based on the closing July futures contract prices for EUR for three consecutive days in March 20XX. You sold two EUR futures contract at the closing price on 3/01. Each EUR futures contract requires the delivery of EUR 150,000. Suppose, the initial and maintenance margin for each EUR futures contract are $2,000 and $1,500, respectively. Date July EUR Futures Contract Price On 3/02 you will O get get O not get; not get O get; not get O not get: get 3/01 3/02 3/03 $1.3328 $1.3345 $1.3398 a margin call and on 3/03 you will a margin call from the exchangearrow_forwardA futures contract will mature in one time step. The current return over one time-step is R = 1.01 and the underlying asset of the future contract is currently worth $27 and has up factor u = 1.1 and down factor d = 0.9. The margin account for the short side of this futures contract currently holds $16. How much will the margin account hold when the futures contract matures if the underlying asset increases in value?arrow_forwardSuppose you work as a broker in an investment company, and there is an expectation that the market interest rate will be 0.031. based on this expectation you are required to calculate the market price for the following CD; Issue date: 1 January 2021 Maturity date:10 May 2021. The face value OMR 10000. Interest on CD: 5 percent.arrow_forward
- Futures Contracts | WSJ.com/commodities Metal & Petroleum Futures Contract Open High hi lo low Copper-High (CMX)-25,000 lbs.; $ per lb. Contract Open Open High hi lo low Settle Chg interest Open Coffee (ICE-US)-37,500 lbs.; cents per lb. Settle Chg interest Dec 194.00 205.55 192.95 204.05 10.05 129,6% March 22 196.95 208.35 195.80 206.90 10.10 70,796 Sugar-World (ICE-US)-112,000 lbs.; cents per lb. Oct 4.1500 4.2030 4.1500 Dec 4.1065 4.2030 4.0585 4.1885 40.1935 0.1035 0.0995 2,734 109,717 March 20.31 20.35 20.02 20.06 -.28 420,744 May 19.72 19.75 19.48 19.53 .23 156,809 Oct Gold (CMX)-100 troy oz.; $ per troy oz. 1754.30 1762.60 1748.50 Sugar-Domestic (ICE-US)-112,000 lbs.; cents per lb. 1757.00 1.70 Nov 1755.90 1764.30 1750.00 1757.70 1.40 4,163 1,093 Nov 37.00 37.01 37.00 37.00 -.05 1,265 March'22 36.00 36.01 36.00 36.00 -.10 2,819 Dec 1757.20 1765.20 1749.90 1758.40 1.40 407,321 Feb 22 1759.10 1766.40 1751.60 1760.10 1.60 46,135 Cotton (ICE-US)-50,000 lbs.; cents per lb. Oct Oct…arrow_forwardJune 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)arrow_forwardYou take a short position in 3 futures contracts on WIG20 on the Warsaw Stock Exchange. The current contract price is 2023. The maintenance margin is 6,5% of the contract value and the initial margin is 15% higher than the maintenance margin. What amount do you need to deposit in the margin account when you take the position? Remember the correct multiplier for these contracts on the WSE. a) 3024.38 PLN. b) 453.66 PLN. c) 4536.58 PLN. d) 9073.15 PLN.arrow_forward
- Assume that today the euro futures contracts with a September 15th delivery date are priced at $1.3680/€ . Suppose that you sold 15 contracts of the euro futures today. If, by September 15th the spot rate is $1.3260/€ , your total profit/loss on your position is (the euro futures contract size is €125,000). $78,750 loss $78,750 gain €78,750 loss €5,250 loss None of the abovarrow_forwardSuppose you buy a December futures contract on a hypothetical 10-year, 6% semiannualcoupon note with a settlement price today of 125-060. You post the initialmargin required for this transaction ($1,430 per $100,000 contract). What nominalannual yield to maturity is implied by the settlement price? If interest rates fall to2.4%, what return would you earn on one futures contract? If interest rates rose to3.2%, what is the return on one futures contract?arrow_forwardRefer to the Mini-S&P contract in Figure 22.1. Assume the closing price for this day.a. If the margin requirement is 23% of the futures price times the contract multiplier of $50, how much must you deposit with your broker to trade the March maturity contract? (Round your answer to the nearest whole dollar.)Required margin depositb. If the March futures price increases to 2594.70, what percentage return will you earn on your investment if you entered the long side of the contract at the price shown in the figure? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Percentage return on net investment%c. If the March futures price falls by 1%, what is your percentage return? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)Percentage return on net investment%arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
