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Use the following corn futures quotes: Corn 5,000 bushels Contract Month Open High Low Settle Chg...

Use the following corn futures quotes:

Corn 5,000 bushels
Contract Month Open High Low Settle Chg Open Int
Mar 455.125 457.000 451.750 452.000 −2.750 597,913
May 467.000 468.000 463.000 463.250 −2.750 137,547
July 477.000 477.500 472.500 473.000 −2.000 153,164
Sep 475.000 475.500 471.750 472.250 −2.000 29,258

Suppose you buy 27 of the September corn futures contracts at the last price of the day. One month from now, the futures price of this contract is 464.125, and you close out your position. Calculate your dollar profit on this investment. (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

Solutions

Expert Solution

We have bought One Future Contract of Corn 5,000 bushels at the Rate of 472.250 Which is Last Settle price of September 27 (Assuming Expiry of Sep end on 27th Sep.).

Therefore Purhase Cost i.e. Acquisition cost = 472.250*5,000 = 2,361,250

After one month when price is 464.125 we close out the position.

Therefore Inflow (Contract Value of Sales) = 464.125*5,000 = 2,320,625

Dollar Profit on Investment Will be (Sales-Purchase) = (40625)


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