Investments
11th Edition
ISBN: 9781259277177
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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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.
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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.
On November 29, 2019 you bought one July 2020 maturity corn futures contract at a futures price of $3.90 per bushel. If the price of the corn in the market in July 2020 (on the maturity date) is $3.78, what is your profit/loss? The contract multiplier is 5000 bushel.
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
Chapter 2 Solutions
Investments
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
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