Suppose you sell six September 2020 palladium futures contracts this day at the lastprice 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 ounceat expiration? (Do not round intermediate calculations and enter your answer as apositive 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 atexpiration? (Do not round intermediate calculations and enter your answer as apositive value rounded to the nearest whole number, e.g., 32.)a.Lossb.ProfitAnswer is not complete.6,200

Step 1:Number of contract = n = 6Quantity per contract = q = 50 troy ozStrike price = k =…

Answered: Suppose you sell six September 2020…

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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Find the price of an American call option on a futures if the current spot price is 30, the exercise price is 25, the futures price is 33.70, the risk-free interest rate is 6 percent, the spot asset can go up by 10 percent or down by 8 percent per period and the call expires in two periods, which is also when the futures expires. Show your working. A. 9.98 B. 8.70 C. 7.73 D. 8.22
June 2019 Mexican peso futures contract has a price of $0.05197 per MXN. You believe the spot price in June will be 0.05831 per MXN a. What speculative position would you enter into to attempt to profit from your beliefs? O Short position O Long Position b. Calculate your anticipated profits, assuming you take a position in three contracts. (Do not round intermediate calculations. Round your answer to the nearest whole number.) Anticipated profit c. What is the size of your profit (loss) if the futures price is indeed an unbiased predictor of the future spot price and this price materializes? (A Negative value should be indicated with a minus sign. Do not round intermediate calculations. Round your answer to the nearest whole number)
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R3
June 2021 Mexican peso futures contract has a price of $0.05197 per MXN. You believe the spot price in June will be $0.05831 per MXN. MXN500,000 is the contract size of one MXN contract. Required: What speculative position would you enter into to attempt to profit from your beliefs? Calculate your anticipated profits, assuming you take a position in three contracts. What is the size of your profit (loss) if the futures price is indeed an unbiased predictor of the future spot price and this price materializes?
A6)
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