The contract size for platinum futures is 50 troy ounces. Suppose you need 500 t

Question

The contract size for platinum futures is 50 troy ounces. Suppose you need 500 troy ounces of platinum and the current futures price is $1,320 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 $1,350 a troy ounce when the futures contract expires? What if the price is $1,265 at expiration? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole number. Omit the "$" sign in your response.)

The contract size for platinum futures is 50 troy ounces. Suppose you need 500 troy ounces of platinum and the current futures price is $1,320 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 $1,350 a troy ounce when the futures contract expires? What if the price is $1,265 at expiration? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole number. Omit the "$" sign in your response.)

Explanation / Answer

Answer:

Contracts to purchase = 500 troy ounces / 50 troy ounces = 10 Contracts

Purchase price = 500 troy ounces * $1320 = $660000

Dollar profit at $1,350= 500 troy ounces * ($1350 - $1320) = $15000

Dollar profit at $1,265 = 500 troy ounces * ($1265 - $1320) = ($27500)

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