Suppose that you SHORT FIVE May 2016 Gold futures contracts at the opening price of $1,119.40/oz on May 4, 2019. You close out your position on May 8, 2019 at a price of $1,110.50/oz. The initial mar...
- Suppose that you SHORT FIVE May 2016 Gold futures contracts at the opening price of $1,119.40/oz on May 4, 2019. You close out your position on May 8, 2019 at a price of $1,110.50/oz. The initial margin and the maintenance margin requirements are $4,400 per contract and $4,000 per contract, respectively. Contract size is 100 troy ounces per contract. Assume that you deposit the initial margin in cash for the FIVE contracts sold and did not withdraw the excess on any given day. (15 pts)
- Complete the table below given the following daily settlement prices. (9 points)
|
Day |
Settlement Price ($/oz) |
Beginning Balance |
Total Daily Profit / Loss |
Margin Call Deposits |
Ending Balance |
|
May 4, 2019 |
$1,120.20 |
||||
|
May 5, 2019 |
$1,118.80 |
||||
|
May 6, 2019 |
$1,135.00 |
||||
|
May 7, 2019 |
$1,130.00 |
||||
|
May 8, 2019 |
- What is your total profit (loss) on the contracts you sold?
- What is your percentage return based on the amount put up as margin?
- If, on May 8, 2016, you chose to deliver the gold, what would you receive and what would you be delivering? State clearly the transactions and the dollar amount involved.
Homework Answers
a) Total profit on the contracts sold is $4882.27
b) Percentage return:
Total profit is $4882.27
Amount put up=5*4400+6557.69
=28557.69
% return = 4882.27/28557.69*100
=17.10%
c) If on may 8 2016, if gold is to be delivered,I will deliver the gold at opening price of the future i.e $1119.40/oz by purchasing the same in the market at $1110.50 (i.e price on May 8) indicating a profit of $4882.27 along with the balance margin of $22742.85. (amount paid 28557.69 minus loss upto May 7 $5814.84_
Physical delivery of gold will not have any impact on profit assuming that there are no additional costs for delivery or handling.
Add Answer to:
Suppose that you SHORT FIVE May 2016 Gold futures contracts at the opening price of $1,119.40/oz on May 4, 2019. You close out your position on May 8, 2019 at a price of $1,110.50/oz. The initial mar...
Suppose that you bought two one-year gold futures contracts when the one-year futures price of gold...
Suppose that you bought two one-year gold futures contracts when the one-year futures price of gold was US$1,340.30 per troy ounce. You then closed the position at the end of the sixth trading day. The initial margin requirement is US$5,940 per contract, and the maintenance margin requirement is US$5,400 per contract. One contract is for 100 troy ounces of gold. The daily prices on the intervening trading days are shown in the following table. Day Settlement Price 0 1340.30 1...
You are long 28 gold futures contracts, established at an initial settle price of $1,536 per...
You are long 28 gold futures contracts, established at an initial settle price of $1,536 per ounce, where each contract represents 100 troy ounces. Your initial margin to establish the position is $12,000 per contract and the maintenance margin is $11,200 per contract. Over the subsequent four trading days, gold settles at $1,525, $1,521, $1,531, and $1,541, respectively Compute the balance in your margin account at the end of each of the four trading days, and compute your total profit...
You are long 20 gold futures contracts, established at an initial settle price of $1,512 per...
You are long 20 gold futures contracts, established at an initial settle price of $1,512 per ounce, where each contract represents 100 troy ounces. Your initial margin to establish the position is $12,000 per contract and the maintenance margin is $11,200 per contract. Over the subsequent four trading days, gold settles at $1,506, $1,502, $1,507, and $1,517, respectively. Compute the balance in your margin account at the end of each of the four trading days, and compute your total profit...
Problem 14-12 Marking-to-Market (LO2, CFA2) You are long 24 gold futures contracts, established a...
Problem 14-12 Marking-to-Market (LO2, CFA2) You are long 24 gold futures contracts, established at an initial settle price of $1,524 per ounce, where each contract represents 100 troy ounces. Your initial margin to establish the position is $12,000 per contract and the maintenance margin is $11,200 per contract. Over the subsequent four trading days, gold settles at $1,518, $1,514, $1,519, and $1,529, respectively. Compute the balance in your margin account at the end of each of the four trading days,...
You are long 19 gold futures contracts, established at an initial settle price of $849 per...
You are long 19 gold futures contracts, established at an initial settle price of $849 per ounce, where each contract represents 100 troy ounces. Your initial margin to establish the position is $12,000 per contract, and the maintenance margin is $11,200 per contract. Over the subsequent four trading days, gold settles at $838, $834, $844, and $854, respectively. Compute the balance in your margin account at the end of each of the four trading days, and compute your total profit...
Problem 16 Intro You are long 55 gold futures contracts. Gold: 100 troy oz.; $ per...
Problem 16 Intro You are long 55 gold futures contracts. Gold: 100 troy oz.; $ per troy oz. Open High Low Settle Change 1,400.37 1,401.71 1,399.95 1,400.32 1.98 | Attempt 5/10 for 10 pts. Part 1 What was your profit or loss over the day (in $)? No decimals Previous answers: 275; -275; 776; -2.75 Submit
You are short 15 gasoline futures contracts, established at an initial settle price of $2.085 per...
You are short 15 gasoline futures contracts, established at an initial settle price of $2.085 per gallon, where each contract represents 42,000 gallons. Your initial margin to establish the position is $7,425 per contract and the maintenance margin is $6,500 per contract. Over the subsequent four trading days, gasoline settles at $2.071, $2.099, $2.118, and $2.146, respectively Compute the balance in your margin account at the end of each of the four trading days, and compute your total profit or...
The futures price of gold is $1,000. Futures contracts are for 100 ounces of gold, and...
The futures price of gold is $1,000. Futures contracts are for 100 ounces of gold, and the margin requirement is $3,000 a contract. The maintenance market requirement is $1,500. A speculator expects the price of gold to rise and enters into a contract to buy gold. a. How much must the speculator initially remit? b. If the futures price of gold rises to $1,005, what is the profit and return on the position? c. If the futures price of gold...
You are short 21 gasoline futures contracts, established at an initial settle price of $2.295 per...
You are short 21 gasoline futures contracts, established at an initial settle price of $2.295 per gallon, where each contract represents 42,000 gallons. Your initial margin to establish the position is $10,375 per contract, and the maintenance margin is $9,475 per contract. Over the subsequent four trading days, gasoline settles at $2.281, $2.309, $2.328, and $2.356, respectively. Compute the balance in your margin account at the end of each of the four trading days, and compute your total profit or...
Assume that futures contracts have zero initial margins and no daily margin calls. That is, you...
Assume that futures contracts have zero initial margins and no daily margin calls. That is, you pay nothing or get nothing when you enter a position in the futures contracts. You pay the entire futures price when you accept delivery of the underlying asset. You get the entire futures price when you make delivery of the underlying asset. Lastly, you pay your entire loss or get your entire profit on your futures position when you close the position with an...
You are long 28 gold futures contracts, established at an initial settle price of $1,536 per ounce, where each contract represents 100 troy ounces. Your initial margin to establish the position is $12,000 per contract and the maintenance margin is $11,200 per contract. Over the subsequent four trading days, gold settles at $1,525, $1,521, $1,531, and $1,541, respectively Compute the balance in your margin account at the end of each of the four trading days, and compute your total profit...
Problem 14-12 Marking-to-Market (LO2, CFA2) You are long 24 gold futures contracts, established at an initial settle price of $1,524 per ounce, where each contract represents 100 troy ounces. Your initial margin to establish the position is $12,000 per contract and the maintenance margin is $11,200 per contract. Over the subsequent four trading days, gold settles at $1,518, $1,514, $1,519, and $1,529, respectively. Compute the balance in your margin account at the end of each of the four trading days,...
You are long 19 gold futures contracts, established at an initial settle price of $849 per ounce, where each contract represents 100 troy ounces. Your initial margin to establish the position is $12,000 per contract, and the maintenance margin is $11,200 per contract. Over the subsequent four trading days, gold settles at $838, $834, $844, and $854, respectively. Compute the balance in your margin account at the end of each of the four trading days, and compute your total profit...
Problem 16 Intro You are long 55 gold futures contracts. Gold: 100 troy oz.; $ per troy oz. Open High Low Settle Change 1,400.37 1,401.71 1,399.95 1,400.32 1.98 | Attempt 5/10 for 10 pts. Part 1 What was your profit or loss over the day (in $)? No decimals Previous answers: 275; -275; 776; -2.75 Submit
You are short 15 gasoline futures contracts, established at an initial settle price of $2.085 per gallon, where each contract represents 42,000 gallons. Your initial margin to establish the position is $7,425 per contract and the maintenance margin is $6,500 per contract. Over the subsequent four trading days, gasoline settles at $2.071, $2.099, $2.118, and $2.146, respectively Compute the balance in your margin account at the end of each of the four trading days, and compute your total profit or...
Assume that futures contracts have zero initial margins and no daily margin calls. That is, you pay nothing or get nothing when you enter a position in the futures contracts. You pay the entire futures price when you accept delivery of the underlying asset. You get the entire futures price when you make delivery of the underlying asset. Lastly, you pay your entire loss or get your entire profit on your futures position when you close the position with an...
Most questions answered within 3 hours.
-
what is IoT? How is it being used today? How will it be used in
the...
asked 5 minutes ago -
Please answer the four questions below.
1. If you were going to test a method that...
asked 19 minutes ago -
Provide two or three examples of support he uses to reinforce
his arguments?
The Alienation of...
asked 27 minutes ago -
QUESTION 1
Why do we see terms with multiple names in the database
community?
Consistency is...
asked 22 minutes ago -
In a titration experiment, 11.5 mL of 0.400 M H2SO4 neutralized
48.0 mL of NaOH. What...
asked 26 minutes ago -
A shot-putter throws the shot with a horizontal velocity of 10
m/s and a
vertical velocity...
asked 42 minutes ago -
Mildred sells industrial-sized refrigeration units. Her
prospective buyer's face looks tense, and his forehead is wrinkled....
asked 43 minutes ago -
Clark Heter is an industrial engineer at Lyons Products. He
would like to determine whether there...
asked 1 hour ago -
3. Use a text editor to create a comma-delimited file of user
IDs and passwords. Revise...
asked 1 hour ago -
Jensen and Associates has a projected balance
sheet that includes the following accounts. What is the...
asked 59 minutes ago -
implement a doubly-linked list in C. Each node in the linked list should contain a string,...
asked 1 hour ago -
What are some best practices and things to avoid when developing
a PowerPoint presentation or file
asked 1 hour ago