Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

Suppose you enter into a short position in 6-month futures contract on 100 ounces of gold at a futures price of $1,858 per ounce. The

image text in transcribed

Suppose you enter into a short position in 6-month futures contract on 100 ounces of gold at a futures price of $1,858 per ounce. The initial required margin is $5,000. Two months after establishing the position, you notice that the futures price at the end of the trading day is now $1,835 per ounce. What is the rate of return in your account considering the initial deposit of $5,000 that you made? (Note: You are asked for a rate of return, not a dollar amount.) Express the rate of return in decimal format, rounded accurately to 4 decimal places (e.g., 10.67% should be expressed as 0.1067 and nothing else)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Foundations of Financial Management

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta

10th Canadian edition

1259261018, 1259261015, 978-1259024979

Students also viewed these Finance questions