Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A Polish farmer buys 1 0 futures contracts for 1 0 0 0 kg of cattle ( each ) in September at PLN 4 .

A Polish farmer buys 10 futures contracts for 1000 kg of cattle (each) in September at PLN 4.99/
kg. Delivery is scheduled for 15 December. The commission on the contract is 25 PLN. Please calculate
the profit/loss of our brave investor-farmer at the time of delivery of the contract (maturity) if:
a) the market price falls to 4.96 PLN/kg;
b) the market price is set at 5.05 PLN/kg.
Does the amount of profit / loss at the end of the contract change depending on the type of
contract: forward / futures?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions

Question

What is the misappropriation theory?

Answered: 1 week ago

Question

What must a creditor do to become a secured party?

Answered: 1 week ago

Question

When should the last word in a title be capitalized?

Answered: 1 week ago