The contract size for platinum futures is 50 troy ounces. Suppose you need 400 t
ID: 2382975 • Letter: T
Question
The contract size for platinum futures is 50 troy ounces. Suppose you need 400 troy ounces of platinum and the current futures price is $1,425 per ounce. How many contracts do you need to purchase? How much will you pay for your platinum? What is your dollar profit if platinum sells for $1,465 a troy ounce when the futures contract expires? What if the price is $1,370 at expiration? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole number. Omit the "$" sign in your response.)
The contract size for platinum futures is 50 troy ounces. Suppose you need 400 troy ounces of platinum and the current futures price is $1,425 per ounce. How many contracts do you need to purchase? How much will you pay for your platinum? What is your dollar profit if platinum sells for $1,465 a troy ounce when the futures contract expires? What if the price is $1,370 at expiration? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole number. Omit the "$" sign in your response.)
Explanation / Answer
The contract size for platinum futures is 50 troy ounces. Suppose you need 400 troy ounces of platinum and the current futures price is $1,425 per ounce. How many contracts do you need to purchase? How much will you pay for your platinum? What is your dollar profit if platinum sells for $1,465 a troy ounce when the futures contract expires? What if the price is $1,370 at expiration? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole number. Omit the "$" sign in your response.)
Contracts to purchase = 400/50 = 8
Purchase price = 1425*400 = $ 570000
Dollar profit at $1,465 = ( 1465-1425)*400 = $ 16000
Dollar profit at $1,370 = ( 1370 - 1425)*400 = - $ 22000
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