48. In August 2022 a companytakes a short position in a contracton April 2023 platinum futures. Itcloses out its position in February2023. The futures price (per ounce)is $1444.20 when it enters thecontract, $1467.16 when it closesout its position, and $1458.13 at theend of December 2022. Onecontract is for the delivery of 1,500ounces platinum. What is thecompany's total gain or loss?

To calculate the company's total gain or loss from its short position in the platinum futures…

Answered: 48. In August 2022 a company takes a…

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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Q3) Suppose that on November 15th, 2021 a company purchased ( i.e. long) one May 2022 live cattle futures contract. One contract is for the delivery of 40,000 pounds of cattle. It closed out its position on February 18th, 2022. The futures price ( per pound) was 135 cents when it entered into the contract, and 139 cents when it closed out its position. The futures price at the end of the year on December 31, 2021 was 136 cents. Assume the company has a Dec 31 year end for tax purposes. What is the total profit? How is it taxed if the company is (a) a hedger, and (b) a speculator ?
On June 6, 2021, firm ABC has a contract to sell 1,000 barrels of crude oil on November 17, 2021. ABC uses a hedge with one WTI NYMEX DEC futures. The DEC Futures traded on June 6, 2021 for $89/barrel. A. What type of hedge will company ABC open? B. On November 17, 2021 the crude spot price is $82/barrel and the DEC Futures is trading for $83.50/barrel. ABC sells the 1,000 barrels in the spot market and closes its hedge. Calculate the price per barrel ABC receives.
= An investor enters a short position in the S&P 500 E-mini futures contract that will expire in three months. The S&P 500 index currently trades at St $4,538.43. (As of 3-Dec-21.) Regarding contract specifications, the contract corresponds to 50 times the S&P 500 index. Additionally, the initial and maintenance margins are, respectively, $12,100 and $11,000. Finally, the futures contract is currently trading at Fț(T) = $4,531.25 (actual settlement price for the Mar-22 contract on 3-Dec-21). Given this information, address the following two questions. 12. Suppose that the annual dividend yield is q = 2%, what is the implied annual risk-free rate r? (a) -0.012 (b) 0.012 (c) 0.014 (d) -0.0370 12
13. The FTSE100 on August 1, 2021 trades at 6250 points. The 6-month UK T-bill rate (in discrete compounding) is 0.50% and the futures price on FTSE100 for a contract with February 2021 delivery is equal to 6179.29 points. Determine the dividend yield (annual basis, discrete compounding) on the FTSE100 which is implied by the market futures price.
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
Consider the following prices, volume and open interest for gold futures contracts. Contract size: 100 oz Price units: $/oz (a) Which contract reached the highest price on this trading day? What was its contract value at that price? (b) Why is the high price equal to the low price for the contract expiring in October 2022?
Choose the correct answer: O The trader gains $10,000. The trader loses $15,000. The trader gains $5,000. The trader loses $10,000. The trader loses $5,000.
You are long 10 gold futures contracts, established at an initial settle price of $1,580 per ounce, where each contract represents 100 ounces. Over the subsequent four trading days, gold settles at $1,584, $1,581, $1,589, and $1,597, respectively. a. Calculate the profit or loss for each trading day. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) b. Compute your total profit or loss at the end of the trading period. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) a. Day 1 a. Day 2 a. Day 3 a. Day 4 b. Total profit/loss
Gold is trading at a one-year futures price of $2,005 per troy ounce. A futures contract comprises 100 troy ounces. The initial margin is $50,125 and the maintenance margin is $32,080. You are short one futures contract. There is a margin call when the price per troy ounce of gold changes to: Group of answer choices A) $1,967 B) $2,207 C) $1,858 D) $2,120
An investor holds a short position in four July crude palm oil futures contracts. When the contract was entered into on day zero, the futures price was RM 2200 per metric tonne. The initial margin is RM 2750 per contract, and the maintenance margin is RM 1500 per contract. The following table gives information on the price of CPO for July delivery over a 3-day period. Day 1 Closing futures Price (RM) 2150 2300 3 2350 Assess what will the variation margin be on the first day a margin call is received? A. RM 11,000 B. RM 10,000 C. RM 5,000
On 1st of March the crude oil’s spot price is $50 and its August futures price is $48. On 1st of July the spot price is $62 and the August futures price is $63.50. An ABC company entered into futures contracts on 1st of March to hedge its purchase of the commodity on 1st of July. It closed out its position on 1st of July. Which position must be taken to hedge the risk and what is the effective price (after the hedging) paid by the company? Choose the right answer a. No correct answer b. Short, $15.50 c. Long, $46.50 d. Long, $15.50 e. Short, $46.50
It is now January. The current annual interest rate is 6.4%. The June futures price for gold is $1485.80, while the December futures price is $1,494. Assume the June contract expires in exactly 6 months and the December contract expires in exactly 12 months. Required: a. Calculate the appropriate price for December futures using the parity relationship? (Do not round intermediate calculations. Round your answer to 2 decimal places.) x Answer is complete but not entirely correct. $ 1,529.86 Price for December futures

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