Question

The contract size for platinum futures is 50 troy ounces. Suppose you need 500 troy ounces...

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

Homework Answers

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)
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