You are a day trader. Yesterday. you sold 4 March 2023 coffee futures contracts at 295 cents per pound. Today, you bought them back at 180 cents per pound. How much did you make or lose on this futures trade? OL I made $172,500. OII. I made $1,725,000. II.I made $43,125. Oly. I made $375,000.
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- Suppose the cotton (a storable commodity) futures prices are currently Expiry Month Price c/lb December 2021 83 December 2022 96 (a) Is the cotton market in contango or in backwardation? (b) What is the slope of the futures curve for cotton? Draw a future curve graph to support your answer. (c) Are there positive returns to storage between Dec 21 and Dec 22? Draw a graph of supply and demand for storage to support your answer (where t=Dec 21 and t+1=Dec 22).10. There are no daily price limits in futures contracts.Rand's remarkable resilience inflicts pain on its doubters The rand seems to no longer follow the rules of the emerging-markets playbook, according toan expert. While many investors expected the rand to buckle in the face of rising US Treasury yields andprospects of a more aggressive pace of Federal Reserve hikes, the currency has done theopposite. The rand is sometimes referred to in currency market circles as "the rattler", because of itshabit of snapping back hard in the opposite direction to a big move.There is a reason South Africa's currency is called "the rattler".While many an investor expected the rand to buckle in the face of rising US Treasury yields and prospects of amore aggressive pace of Federal Reserve hikes, the currency has done the opposite. It's just posted its fifthweekly gain, causing pain for those who have bet against it."In a risk-off and volatile environment, the rand used to be one of the weakest currencies," said Milan-basedinvestor Roberto Bagnato at…
- Assume that annual interest rates are 10 percent in the United States and 4 percent in Japan. An FI can borrow (by issuing CDs) or lend (by purchasing CDs) at these rates. The spot rate is $0.62/¥. a) If the forward rate is $0.67/¥, how could the FI arbitrage using a sum of $1million? b)What forward rate will prevent an arbitrage opportunity?Economists John Maynard Keynes and John Hicks argued that, if hedgers tend to holdshort positions and speculators tend to hold long positions, the futures price of an assetwill be below the expected spot price. This is because speculators require compensationfor the risks they are bearing. They will trade only if they can expect to make money onaverage. Hedgers will lose money on average, but they are likely to be prepared toaccept this because the futures contract reduces their risks This is from John Maynard Keynes. My question is i dont understand this statement. Why is the future price of an asset to be below the expected spot price if speculators are the main determinant of the future price, they have a long contract which means they will earn money if the spot price is above the expected spot priceThe following table indicates the unit prices (in Rands) and quantities of three goods held in the national warehouse of a DIY (“do it yourself”) store for the years 2020 and 2021. Item 2020 2021 Unit Price (p0) Quantity (q0)) Unit Price (p1) Quantity (q1) Mineral spirits R23.70 30 R27.70 45 10mm spanner R49.00 60 R65.00 50 25mm brush R58.00 30 R63.00 40 Q.8.1 Using 2020 as the base year, compute the price relatives in 2021 for the 10mm spanner and the 25mm brush. Interpret your answers. (8) Q.8.2 Again, using 2020 as the base year, compute the Paasche price index for all of the items for 2021. Interpret your answer.
- Select the two people who are correct about contango and backwardation markets. Greg: "Contango has a downward sloping curve" Andrew: "Backwardation has an upward sloping curve." Anna: "Backwardation happens when the futures prices are below the spot price" Meeyeon: "Commodity futures prices are typically higher than spot prices"Name and explain 2 differences between using oil futures to fix the price of future purchases. Graph if helpfulD & R 1 Question 1. Futures Pricing Assumptions What are the assumptions that allow us to obtain the prices of futures and forward contracts in the same way? What happens if these assumptions are not satisfied?
- Prices of money market instruments undergo the least price fluctuations because of 1) the long terms to maturity for the securities O 21 the heavy regulations in the industry 3) the price ceiling imposed by government regulators 4) the lack of competition in the market 5) being completely default free instruments 6) None of the answers are correctD & R A1 6 Question 6. Foreign Currency Futures and Arbitrage Strategy Today is May 23, 2016. The spot rate for British pounds is 1.9032 CAD/£. The Canadian risk-free rate is 0.52%, and the British risk-free rate is 0.45%. Both risk-free rates are compounded continuously. The vote by the British population for U.K. exit from the European Union (commonly referred to as Brexit) will occur in exactly one month. Due to the uncertainty from this event, market volatility on the British pounds futures is quite high. As an example, the British pound futures contract, which expires on September 23, is priced below the spot rate at 1.4497CAD/£. The futures contract size is 62,500 British pounds. Is the futures contract incorrectly priced? If so, construct a risk-free arbitrage strategy to take advantage of the mispricing. Assume there are 365 days in the year, and the Canadian dollar is the domestic currency.Suppose that we can describe the world using two states and that two assets are available, asset K an asset L. We assume the asset’s future prices have the following distribution State Future Price Asset K Future Price Asset L 1 $55 $60 2 $45 $30 The current price of asset K is $50, and the current price of asset L is $50. What is the price implied for an asset providing $100 in state 1 and $50 in state 2?