Question
The futures price of gold is $1,200. Futures contracts are for 100 ounces of gold, and the margin requirement is $6,000 a contract. The maintenance
The futures price of gold is $1,200. Futures contracts are for 100 ounces of gold, and the margin requirement is $6,000 a contract. The maintenance market requirement is $1,800. You expect the price of gold to rise and enter into a contract to buy gold.
a. How much must you initially remit? Round your answer to the nearest dollar. $
b. If the futures price of gold rises to $1,265, what is the profit and return on your position? Round your answer for profit to the nearest dollar and for return to the nearest whole number. Profit: $ Return: %
c. If the futures price of gold declines to $1,172, what is the loss on the position? Round your answer to the nearest dollar. Enter the answer as a positive value. $
d. If the futures price declines to $1,138, what must you do? Round your answer to the nearest dollar. Enter the answer as a positive value. The investor will have to -- $ to restore the initial $6,000 margin.
e. If the futures price continues to decline to $1,122, how much do you have in your account? Round your answer to the nearest dollar. $
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