What will be the investors profit or loss

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Reference no: EM131278707

On Monday morning, an investor takes a long position in a pound futures contract that matures on Wednesday afternoon. The agreed-upon price is $1.78 for £62,500. At the close of trading on Monday, the futures price has risen to $1.79. At Tuesday close, the price rises further to $1.80.

At Wednesday close, the price falls to $1.785, and the contract matures. The investor takes delivery of the pounds at the prevailing price of $1.785. Detail the daily settlement process (see Exhibit 8.3). What will be the investor's profit (loss)?

Reference no: EM131278707

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