You have decided to purchase 25 oil futures contracts at a settle price of $55 per barrel.

Question:

You have decided to purchase 25 oil futures contracts at a settle price of $55 per barrel. Each futures contract has a standard size of 1,000 barrels and an initial margin requirement of $5,500.

a. What is the leverage factor associated with these contracts?

b. If oil rises to $56.25 per barrel, what is the total percentage return on your futures position?

c. What is the total percentage return on your futures position if oil falls to $54 per barrel?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Fundamentals Of Investments Valuation And Management

ISBN: 9781266824012

10th Edition

Authors: Bradford Jordan, Thomas Miller, Steve Dolvin

See More Books

Question Posted: Jan 02, 2024 05:41 AM

See More Questions

You have decided to use futures contracts to invest in silver at a settle price of $15 per ounce. Each futures contract has a standard size of 4,400 troy ounces and an initial margin requirement of...
Given the information in the previous problem, what is the leverage factor associated with these contracts. If silver rises to $17 per ounce, what is your total percentage return? Problem 17.6 You...
Derby Chips is an international producer of corn chips. At the end of 2006, Mary Hahn, president of Derby, appointed a task force to focus on the packaging and product use segments of its products...
You are given the equation(s) used to solve a problem. For each of these, you are to a. Write a realistic problem for which this is the correct equation(s). b. Finish the solution of the problem.
Consider the system shown in figure(a) Determine its impulse response h(n).(b) Shown that h(n) is equal to the convolution of the following signals.h1(n) = ?(n) + ?(n - 1)h2(n) = (1/2)n u (n) x(n)...
The antenna tower is supported by three cables. If the forces of these cables acting on the antenna are FB = 520 N, FC = 680 N, and FD = 560 N, determine the magnitude and coordinate direction angles...
Identificar las principales influencias psicolgicas en el comportamiento de los consumidores .
Indicate which of the four perspectives in the balanced scorecard is most likely associated with the objectives that follow. 1. Ethics violations. 2. Credit rating. 3. Customer retention. 4....
Help Save & Exit Submit Check my work Cycle-1 is a fast-growing start-up firm that manufactures bicycles. The following income statement is available for October: $352,000 Sales revenue (550 units...
Why do agency bonds carry a higher yield than comparable U.S. Treasury bonds?
Sky High Partners is evaluating a high-rise office building to add to its investment portfolio. To calculate a value, Sky High plans to use the income approach, based on the following estimates: a....
A typical home may require a total of 2.00 103 kWh of energy per month. Suppose you would like to obtain this energy from sunlight, which has an average daylight intensity of 1.00 103 W/m2....
The State Public Works Division consists of the Administrator, the State Public Works Board, the Public Works Section, and the Buildings and Grounds Section. The State Public Works Board consists of...
Everyone knows that health care costs are high. It is also known that people tend to spend less on health care if they spend their own money, which motivated the creation of flexible spending...
Write a essay that critically evaluates issues in financing health care by addressing the provided prompts. Educate operational leadership on why it is important to the overall bottom line of the...
What are the types of conflicts that individuals may have at work? Which type have you experienced the most? 2. What are some primary causes of conflict at work? 3. Explain how miscommunication might...
What program do you work with that has a budget? Navy JROTC Who helps to determine how the funds are allocated and spent? US Navy and St. Elizabeth ISD How did you find out the budget amount? Does...
Discuss some of the penalties that can be imposed on the taxpayer for understating his tax liability.
Starr Co. had sales revenue of $540,000 in 2014. Other items recorded during the year were: Cost of goods sold ..................................................... $330,000 Salaries and wages...
Acme Corporation is a highly profitable closely held corporation that has never paid a dividend. During the past five years, after-tax earnings of $200,000 per year have been retained in the...
In terms of a corporations incurring liability for the tax, what is the difference between the personal holding company tax and the accumulated earnings tax? Do both taxes require a tax avoidance...
Why are controlled groups of corporations required to apportion among group members the lower rates applicable to taxable income up to $75,000?
Describe how the following affect the valuation of PPE. a) Cash Discounts b) Deferred Payment Contracts
Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five - year period. His annual pay raises are determined by his division s...
Consider a 5 year debt with a 15% coupon rate paid semi-annually, redeemable at Php1,000 par. The bond is selling at 90%. The flotation cost is Php50 per bind. The firm's tax bracket is 30%.

You have decided to purchase 25 oil futures contracts at a settle price of $55 per barrel.

Question:

Step by Step Answer:

a Margin percent 55001000 55 1000 or 1000 Leverage 110 10x Cash re...View the full answer

Fundamentals Of Investments Valuation And Management

Students also viewed these Business questions