Determination of gains or losses

Reference no: EM1361254

Currency futures contracts are traded on organized exchanges. Suppose you sell a contract on Australian dollars in the amount of A$100,000 on the Chicago Mercantile Exchange at $0.7900/A$. Upon maturity of the contract, the futures price is $0.7500/A$.

a. Have you made money or lost money? How much have you made or lost?

b. If you hold your position to maturity, what do you do to settle the contract? How are the gains or losses paid?

Reference no: EM1361254

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