Future new position value

Assignment Help Finance Basics
Reference no: EM132473766

Gold price today is $1445; the future price that expires in 6 months (June 2020) is $1460 per ounce. You believe the price of gold will go up over the next 6 months. So, you will buy one futures contract that expires in June 2020. There are 100 ounces of gold in each futures contract and margin requirement for gold future is $35oo per contract.

a) What's your future's initial position value when you buy this future contract?

b) If 6 months later, the price of gold goes up to $1470, what's the future's new position value?

c) What's your return on investments (ROI) from the trade?

d) What's the basis of the June 2020 futures?

e) If the risk-free rate is 3%, what's the gold future price for June 2020 according to the spot future parity?

Reference no: EM132473766

Questions Cloud

What one-year forward rate will create interest rate parity : The risk-free nominal rate in the U.S. is 5 percent while it is only 4 percent in Canada. What one-year forward rate will create interest rate parity?
Multinational firm with sales in australia and inputs : Suppose the company is a multinational firm with sales in Australia and inputs purchased in Japan. How should this affect its financing choice?
What is the function of each structure : What is the function of each structure? How does each work exhibit influence of the Greco-Roman period? Is the influence specifically Greek, Etruscan, or Roman.
What are the advantages and disadvantages of trade : Suppose an investor purchases a "bear put spread" (i.e. she buys one put option P1 for $5 with a strike of $35 and sells one put option P2 for $2
Future new position value : If 6 months later, the price of gold goes up to $1470, what's the future's new position value?
Identify your personal assumptions about the hypothesis : When you critically evaluate a study, you must decide whether you agree or disagree with the researcher's theoretical framework.
Discuss variance analysis with peers : Discuss variance analysis with peers. Do you think variance analysis helps or hinder performance evaluation within the organization?
Explain pathologic processes that caused patients hypoxemia : Mr. Jones is a 78- year old gentle man who presents to the clinic with a chief complaint of fever, chills and cough. He also reports some dyspnea.
Design and simulate the most common wireless communication : Critical analysis/discussion of the investigation should be supported by evidence in the form of well-researched examples wherever appropriate

Reviews

Write a Review

Finance Basics Questions & Answers

  How much of the insurance premium should be allocated

Property insurance on the building is $9,000 per year and will not change because of the new activity. How much of the insurance premium should be allocated to the new product line?

  What is the annual cost of debt to the company on the issue

S. Claus & Company is planning a zero coupon bond issue. The bond has a par value of $1,000, matures in 2 years, and will be sold at a price of $826.45.

  What should the price of the preferred stock be today

What should the price of the preferred stock be today? What should the price of the common stock be today?

  What is the estimated price of a call option

If the put premium is $18.00 and interest rates are 0.5% per month, what is the estimated price of a call option with an exercise price of $830?

  History of saturn and gm

Throughout its existence, Saturn has never turned a profit for General Motors. Research the history of Saturn and GM's decision to continue funding it (although GM has now decided to close down the auto maker).

  Analyze the difference between a firm financial

Analyze the difference between a firm's financial vs. operating leverage. Could you define them and state their differences?

  Explain to bill the goals and rewards of the personal

bills need to know personal finance or tennis?during the christmas break of his final year at ohio state bill bledsoe

  If you bought a share of stock what would you expect to

if you bought a share of stock what would you expect to receive when would you expect to receive it and would you be

  What effect do you think the inflation adjusted interest

What effect do you think the inflation-adjusted interest rate has on the cost of an I-bond in comparison with similar bonds with no allowance for inflation?

  Computation of expected rate of return and beta

Computation of expected rate of return and Beta and Demonstrate to your colleagues how you would calculate the expected rate of return also called r-hat

  Calculate the optimum production plan

Calculate the optimum production plan and the resulting contribution permonth based on the above information

  There are two vacancies in a certain statistics department

there are two vacancies in a certain statistics department in the united states. five individuals apply. two have

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd