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
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- Q: inance Department 7. On November 1, 2020 a trader took a long position in three futures contracts on a commodity that expires on March 31", 2021. The initial futures price is $60. On December 31, 2020 the futures price is $61. On Feb 28, 2021 it is $64. The contract is closed out on February 28, 2021 What gain is recognized in the accounting year from January 1 to December 31, 2020? Each contract is on 1000 units of the commodity and the transaction qualities to be considered as a hedge. A. $0 B. $3,000 C. $9,000 D. $12,000Question #2: Futures Contracts The chart below shows a quote for a futures contract on the NASDAQ 100 Index Delivery Date Futures Price NASDAQ 100 November 2020 9325.75 (a) This futures contract is an example of a(n) contract. Circle yŅır answer. No explanation is required Financial Futures Commodity Futures Interest Rate Futures Currency Futures (b) Assume that for the NASDAQ Futures contract the futures price is multiplied by a multiple of $100 to get the total contract value. If the margin requirement is 7%, how much must you deposit into your margin account to purchase three (3) November 2020 NASDAQ contracts? (c) Suppose the day after you purchased the 3 contracts, the NASDAQ 100 Index rises to 9400. What will happen to your margin account? (d) Suppose the NASDAQ 100 Index futures price rises by 5%. What is the percentage return on your investment on the 3 futures contracts?Kinder The following information is available to you regarding cash and futures prices: May futures contract Price contract Price contract Price contract Price contract Price on May 10 Sep futures Dec futures Dec futures Mar futures Cash price on Cash price on May 10 Year Oct 31 on Sep10 on May 10 on Oct 31 on Pct 31 2011 $5.07 $4.61 $5.35 $5.89 $6.10 $4.91 $5.33 2012 $3,12 $3,15 $3.54 $3.82 $3.75 $3.09 $3.24 2013 $4.18 $4.39 $3.70 $3.77 $4.11 $4.35 $4.87 2014 $6.83 $6.22 $7.04 $6.69 $7.18 $7.64 $7.72 2015 $7.42 $7.77 $6.46 $6.59 $6.40 $7.93 $10.73 2016 $4.75 $4,32 $7.10 $7.46 $8.17 $4.71 $4.76 2017 $3.59 $3.88 $4.66 $4.71 $5.31 $4.19 $4.35 2018 $3.33 $3.22 $3.96 $4.54 $4.24 $4.36 $3.54 2019 $3.40 $3.99 $3.69 $3.69 $4.10 $4.15 $4.93 2020 $3.38 $3.80 $3.87 $3.87 $4.37 $3.77 $4.48 1. Calculate the basis of each year for a com producer who plants com on May 10 and harvests/sells com cach Oct 31. Then calculate the 10-ycar simple average basis. (the only answer required here is the 10-year…
- 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.)D & R A1 7 Question 7. Fed Funds Futures Arbitrage On August 1, the one-month LIBOR rate is 2.0 percent and the two-month LIBOR rate is 2.5 percent. The 30-day fed funds futures is quoted at 96.75. Assuming no basis risk between fed funds and one-month LIBOR at the start of the delivery month, identify whether an arbitrage opportunity is available. The contract size of the fed funds futures is $5,000,000.The IMM index price in yesterday's newspaper for a September Eurodollar futures contract is 95.23. The IMM index price in today's newspaper for the contract mentioned above is 95.25. How much is the change in the actual futures price of the contract since the previous day? $25 $50 $75 $100 .
- Suppose today is December 4, 2020, and your firm produces breakfast cereal and needs 160,000 bushels of corn in March 2021 for an upcoming promotion. You would like to lock in your costs today because you are concerned that corn prices might go up between now and March. Use Table 25.2 a. What is the total price you are locking in for the 160,000 bushels of corn based on the day's closing price? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. Suppose corn prices are $4.66 per bushel in March. What is the profit or loss on your futures position? (Enter your answer as a positive value. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) a. b. Total costCurrent futures prices ($/barrel): Oct 70.01; Dec 69.78; Mar 69.40. Contract size: 1000 barrels WTI crude oil put premium quotes ($/barrel) Strike price ($/barrel) Oct ‘21 Dec ‘21 Mar ‘21 69.00 1.00 4.20 7.10 69.50 1.10 4.30 7.30 70.00 1.20 4.62 7.90 70.50 1.49 4.92 8.2 1. Suppose the speculator still holds the put option at the expiry date. If the futures price at expiry is $73/barrel, should he: (i) Do nothing (ii) Exercise the option 2. Suppose the speculator still holds the put option at the expiry date. If the futures price at expiry is $67/barrel, should he: (i) Do nothing (ii) Exercise the optionComplete the table above for the holder of the short position. Day Beginning Balance Funds Deposited Settlement Price Futures Price Change Gain/Loss Ending Balance 0 0 5000 1 4960 2 4800 3 5050 4 5175 5 5200 6 5250.50 7 5310.75 2. How much are the total gains or losses by the end of day 7?
- 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 $59.50Title Subtifie dading Paragraph Styles A bank customer is going to London in June to buy £ 200000 in new inventory. The current spot and futures exchange rates are: spot: $1.510/£, June futures: $1.625/£. The customer takes a position in June futures to fully hedge her position. In June, the actual FX rate is $1.720/£. How much did she save?Use the following corn futures quotes (priced in cents): Contract Month Mar May July Sep Corn 5,000 bushels Dollar profit Low Open Int Open High Settle Chg 455.125 457.000 451.750 452.000 -2.750 597,913 467.000 468.000 463.000 463.250 -2.750 137,547 477.000 477.500 472.500 473.000 -2.000 153, 164 475.000 475.500 471.750 472.250 -2.000 29,258 Suppose you sell 17 of the May corn futures at the high price of the day. You close your position later when the price is 464.625. Ignoring commission, what is your dollar profit on this transaction? (Do not round intermediate calculations. Round your answer to 2 decimal places.)