Question

The contract size for platinum futures is 50 troy ounces. Suppose you need 500 troy ounces of platinum and the current futures price is $930 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 $980 a troy ounce when the futures contract expires? What if the price is $880 at expiration? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole number.)

Contracts to purchase
Purchase price
Dollar profit at $980
Dollar profit at $880

Answer 1

1.Contracts to purchase
contracts size	50 troy ounces
total number of ounces to bepurchased	500 troy ounces
contracts to purchase=(500/50)	10
2.Purchase price	930*50*10
purchase price=(contracts*price*ounces per contract))	465000
purchase price is $465000
3.profit at 980
	(980-930)*10*50
profit =(selling price-purchadse price)*contracts*ounces per contract	25000
profit is $25,000
4. dollar profit at $880
	(880-930)*10*50
profit =(selling price-purchadse price)*contracts*ounces per contract	-25000
profit is -$25,000 (loss)