Three days ago, you entered into a futures contract to sell €62,500 at $1.50 per €. Over the past three days the contract has settled at $1.50, $1.52, and $1.54. How much have you made or lost?Group of answer choicesLost $0.04 per € or $2,500Lost $0.06 per € or $3,750Made $0.04 per € or $2,500none of the options
Question
Three days ago, you entered into a futures contract to sell €62,500 at 1.50, 1.54. How much have you made or lost?Group of answer choicesLost 2,500Lost 3,750Made 2,500none of the options
Solution
The value of the futures contract is determined by the exchange rate between the Euro (€) and the Dollar (1.50 per €. This means that you agreed to sell €62,500 for 1.50).
Over the next three days, the exchange rate increased to 1.54. This means that the value of the €62,500 you agreed to sell has increased.
On the first day, the contract settled at $1.50 per €, so there was no change in the value of the contract.
On the second day, the contract settled at 95,000 (€62,500 * 1,250 (93,750).
On the third day, the contract settled at 96,250 (€62,500 * 1,250 (95,000).
So, over the three days, you have lost a total of 0.04 per € (€62,500 * 2,500). Therefore, the correct answer is "Lost 2,500".
Similar Questions
Yesterday, you entered into a futures contract to buy €62,500 at $1.50/€. Your initial margin was $3,750 (= 0.04 × €62,500 × $1.50/€ = 4 percent of the contract value in dollars). Your maintenance margin is $2,000 (meaning that your broker leaves you alone until your account balance falls to $2,000). At what settle price (use 4 decimal places) do you get a margin call?Group of answer choices$1.500/€none of the options$1.5280/€$1.4720/€
An investor sells a futures contract on an asset when the futures price is $2500. Each contract is on 100 units of the asset. The contract is closed out when the futures price is $2560. Which of the following is TRUE? Select one alternative The investor has made a gain of $4000. The investor has made a gain of $6000. The investor has made a loss of $6000. The investor has made a loss of $4000.
Suppose a buyer of a futures contract bought the futures contract at $13 per unit. Which of the following settlement price will allow the buyer of this contract to have a gain of $4 per contract?Group of answer choices$4.$9.$13.$17.
Calculate the initial value of a Eurodollar futures contract given a current futures price of 92.55.Question 4Answera.None of the options in this question are correct.b.USD1,000,000c.USD988,750d.USD23,887,500e.USD981,375
Select the correct answerA person sold two articles for 1200 each; he made a profit of 20% and a loss of 20% on the other. What will be the overall profit or loss in percentage?OptionsCannot be determinedNo Profit No lossProfit 4%Loss 4%
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.