CORPORATE FINANCE>CUSTOM<
CORPORATE FINANCE>CUSTOM<
11th Edition
ISBN: 9781308755465
Author: Ross
Publisher: MCG/CREATE
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Chapter 25, Problem 2QP
Summary Introduction

To calculate: Profit or loss if silver prices turn out to be $16.61 per ounce at expiration and $16.43 per ounce at expiration.

Future Contracts:

In future contracts an agreement has been signed by the two parties for the purpose of buying and selling of particular underlying assets at the decided date with specified period of time. Buying an underlying asset is called the long position while selling is called the short position.

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Last week, you sold a futures contract on 5,000 troy ounces of silver at a settle price of S 23.10. Today, you made delivery and the daily settle price was $23.15. What amount will you receive at the time of delivery? Assume yesterday's settle price was $23.19.
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