The contract size for platinum futures is 50 troy ounces. Suppose you need 1,400

Question

The contract size for platinum futures is 50 troy ounces. Suppose you need 1,400 troy ounces of platinum and the current futures price is $1,255 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 $1,295 a troy ounce when the futures contract expires? What if the price is $1,200 at expiration? (Negative amounts should be indicated by a minus sign. Omit the "$" sign in your response.)


Contracts to purchase
Purchase price $
Dollar profit at $1,295 $
Dollar profit at $1,200 $

Explanation / Answer

contract size = 50 ounces no. of contracts = 1400/50 = 28 (ANSWER) Purchase price per contract @1255 per ounce = 1255*50 = 62750 (ANSWER) Purchase amount = 62750*28 = 1 757 000 (ANSWER) Profit at 1295 price at expiration = (1295 -1255)*28*50 = 56000 (ANSWER) Profit at 1200 price at expiration = (1200 -1255)*28*50 = - 77000 (ANSWER)

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