Crude oil contracts are $1,000$ barrels, are quoted in dollars per barrel, and the initial margin is $9,000$ per

contract.

A speculator believes the price of crude oil will rise and opens a crude oil futures position in $75$

contracts at $75\mathrm{.}25.$ The speculator closes out the position at $74\mathrm{.}34.$

a$.$ What is the speculator$$s profit$/$loss$?$ $$68,250$ loss

b$.$ What is the speculators return? $-10\mathrm{.}11\%$

c$.$ If$,$ instead, the speculator closes out at a futures price of $75\mathrm{.}85$ what is the speculator$$s

profit$/$loss and return? $$45,000$ profit; $6\mathrm{.}67\%$

d$.$ Suppose the speculator has a target loss limit of $1\mathrm{.}5\%$ and a target profit limit of $4\mathrm{.}5\%.$ At

what futures prices would the speculator choose to close out? $75\mathrm{.}12$; $75\mathrm{.}66$