Question
Suppose you enter into a short position in 6-month futures contract on 100 ounces of gold at a futures price of $1,863 per ounce. The
Suppose you enter into a short position in 6-month futures contract on 100 ounces of gold at a futures price of $1,863 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 $1,844 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
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started