Suppose you have $8,000 to invest and you follow the strategy you devise in question 15 to leverage your exposure to the copper market. Copper is selling at

$3 a pound and the margin requirement for a futures contract for 25,000 pounds of copper is $8,000.

a. Calculate your return if copper prices rise to $3.10 a pound.

b. How does this compare with the return you would have made if you had simply purchased $8,000 worth of copper and sold it a year later?

c. Compare the risk involved in each of these strategies.