Problem 2-25 Look at the futures listings for corn in Figure 2.11. a. Suppose yo
ID: 2814715 • Letter: P
Question
Problem 2-25
Look at the futures listings for corn in Figure 2.11.
a. Suppose you buy one contract for July 2015 delivery at the closing price. If the contract closes in July at a price of $3.74 per bushel, what will be your profit or loss? (Each contract calls for delivery of 5,000 bushels.) (Round your answer to 2 decimal places.)
(Click to select)Profit or Loss of $ ??
b. How many July 2015 maturity contracts are outstanding?
Number of outstanding contracts ??
FIGURE 2.11 Corn futures prices in the Chicago Board of Trade, September 17, 2014 Source: Data from The Wall Street Journal Online, September 17, 2014 OPEN MONTH Dec 14 Mar '15 May 15 Jul '15 LAST 341'6 354'0 362'4 369 6 377'2 388'2 OPEN 343'2 355'4 364'0 371'2 378'0 3894 HIGH 344'2 356 0 364'2 371 2 378'0 3900 LOW 339'2 351'0 359'4 366'6 3750 385'4 VOLUME 74580 19416 6153 5171 1791 3876 INT 796121 201794 51800 76051 20972 99741 CHG -2'0 -1'6 -2'0 Dec 15 -1'6Explanation / Answer
Answer(a): July 2015 contract, bought at 3.69 and the contract closes at a price of $3.74
so the Profit: 3.74 - 3.69 = $.05/ bushel
Total Profit: .05 * 5000 = $250
Answer(b): Number of outstanding contracts = 76051 contracts that is representing 380255000 (76051*5000) bushels
Open Interest tells the total number of contract that are outstanding.
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