This is an Excel homework on forward contracts, underlying asset, and the T-bill (cash).

Very important:

You must label your x-axis and y-axis.

You must provide info on the graph, which means what the graph shows.

If there are more than one line on the table, you must separate them either with color or solid versus broken line.

Problem-01a: Current crude oil price is $53.25 per barrel. You sell (short position) 5 crude oil futures contracts at futures price of $55.00 per barrel with maturity of one month. The contract size is 1,000 barrels per one contract.

What is your profit if the crude oil price is $57.50 at maturity and assume cash settlement for this problem?

ii. What is your profit if the crude oil price is $48.0 at maturity and assume cash settlement for this problem?

Problem-02b: Using information in problem-02a:

Graph your profit/loss function for likely crude oil prices between $20 and $80 in increments of $5.00 at maturity. Label both axes properly!

Show the profit and loss for the likely prices in problem-02a. Note that you already calculated them in 02a. Just add your findings to the graph.

Problem-01a: Suppose you take a long (buy) position on 8 S&P 500 futures contracts when the futures price of the index is 2352.47. Assume that this is one-month maturity futures contract. Note that one futures contract is equal to $(250)x(Index Value).

What is your profit/loss if S&P 500 index is 2319.37 at maturity?

ii. What is your profit/loss if S&P 500 index is 2434.75 at maturity?

Problem-03b: Using information in problem 03a:

i. Graph your profit/loss function for likely S&P 500 index numbers between 2250 and 2500 in increments of 20 at maturity. Label both axes maturity properly!

ii. Show the profit and loss for the likely prices in problem-03a. Note that you already calculated them in 03a. Just add your findings to the graph.