?Tony? Begay, a currency trader for? Chicago-based Saguaro? Funds, uses futures
ID: 2657424 • Letter: #
Question
?Tony? Begay, a currency trader for? Chicago-based Saguaro? Funds, uses futures quotes on the British pound ?(pound?) to speculate on the value of the pound. Use the futures quotes in the table below to answer the following questions.
British Pound Futures, US$/pound (CME)
Contract = 62,500 pounds
Maturity
Open
High
Low
Settle
Change
High
Open Interest
March
1.4246
1.4268
1.4214
1.4228
0.0032
1.4700
25,605
June
1.4164
1.4188
1.4146
1.4162
0.0030
1.4550
809
a. If Tony buys 5 June pound? futures, and the spot rate at maturity is ?$1.3982?/£, what is the value of her? position?
b. If Tony sells 12 March pound? futures, and the spot rate at maturity is ?$1.4559?/£, what is the value of her? position?
c. If Tony buys 3 March pound? futures, and the spot rate at maturity is ?$1.4559/£, what is the value of her? position?
d. If Tony sells 12 June pound? futures, and the spot rate at maturity is ?$1.3982?/£, what is the value of her? position?
British Pound Futures, US$/pound (CME)
Contract = 62,500 pounds
Maturity
Open
High
Low
Settle
Change
High
Open Interest
March
1.4246
1.4268
1.4214
1.4228
0.0032
1.4700
25,605
June
1.4164
1.4188
1.4146
1.4162
0.0030
1.4550
809
Explanation / Answer
a). Value = (5 x £62,500) x ($1.3982/£ - $1.4162/£) = £312,500 x -$0.018/£ = -$5,625
b). Value = (12 x -£62,500) x ($1.4559/£ - $1.4228/£) = -£750,000 x $0.0331/£ = -$24,825
c). Value = (3 x £62,500) x ($1.4559/£ - $1.4228/£) = £187,500 x $0.0331/£ = $6,206.25
d). Value = (12 x -£62,500) x ($1.3982/£ - $1.4162/£) = -£750,000 x -$0.018/£ = $13,500
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.