June 2021 Mexican peso futures contract has a price of $0.05197 per MXN. You believe the spot price in June will be $0.05831 per MXN. MXN500,000 is the contract size of one MXN contract. Required: What speculative position would you enter into to attempt to profit from your beliefs? Calculate your anticipated profits, assuming you take a position in three contracts. What is the size of your profit (loss) if the futures price is indeed an unbiased predictor of the future spot price and this price materializes?
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- The Mexican peso futures contract is trading at 0.07713 $/MXN. Contract size for the Mexican peso future is 500,000 pesos. You believe the spot price will be 0.08365 $/MXN at expiration. What speculative position would you enter into to profit from your beliefs? Calculate your anticipated profits assuming you take a position in three contracts. What is the size of your profit or loss if the futures price is indeed an unbiased predictor of the future spot price and this price materializes? Do problem 1 again assuming you believe the spot price will be 0.07061 $/MXN.June 2019 Mexican peso futures contract has a price of $0.05197 per MXN. You believe the spot price in June will be 0.05831 per MXN a. What speculative position would you enter into to attempt to profit from your beliefs? O Short position O Long Position b. Calculate your anticipated profits, assuming you take a position in three contracts. (Do not round intermediate calculations. Round your answer to the nearest whole number.) Anticipated profit c. What is the size of your profit (loss) if the futures price is indeed an unbiased predictor of the future spot price and this price materializes? (A Negative value should be indicated with a minus sign. Do not round intermediate calculations. Round your answer to the nearest whole number)The 3-month June 2023 dollar interest rate futures contract is currently priced at 95.50. The contract has a nominal value of 1 million dollars. (1) What is the party that sells the dollar interest rate futures contract agreeing to? (2) If you think the 3-month spot interest rates on the dollar will be around 6% in June 2023 would you buy or sell the contract? Explain your reasoning. (3) How much profit in dollars would you make if you take the action based on part (ii) and are proved right i.e., the 3-month interest rate on the dollar is 6% in June 2023. (Show your working in full) (4) What 3-month dollar interest rate in June 2023 will give a break-even position for the seller of the contract? (Show your working in full) (5) What is the profit (+) or loss (-) for the buyer of the contract if the 3-month dollar interest rate in June 2023 is 2%? (Show your working in full)
- Suppose the September Eurodollar futures contract has a price of 96.4. You plan to borrow $50m for 3 months in September at LIBOR, and you intend to use the Eurodollar contract to hedge your borrowing rate. a. What rate can you secure? b. Will you be long or short the Eurodollar contract? c. How many contracts will you enter into? d. Assuming the true 3-month LIBOR is 1% in September, what is the settlement in dollars at expiration of the futures contract? (For purposes of this question, ignore daily marking-to-market on the futures contract.)Suppose you buy a December futures contract on a hypothetical 10-year, 6% semiannualcoupon note with a settlement price today of 125-060. You post the initialmargin required for this transaction ($1,430 per $100,000 contract). What nominalannual yield to maturity is implied by the settlement price? If interest rates fall to2.4%, what return would you earn on one futures contract? If interest rates rose to3.2%, what is the return on one futures contract?Look at the futures listings for the corn contract in Table 2.7 Suppose you buy one contract for March 2020 delivery. If the contract closes in March at a level of 4.27, what will your profit be? (Round your answer to 2 decimal places.) Profit
- A European call that will expire in one year is currently trading for $3. Assume the risk-free rate (based on continuous compounding) is 5%, the underlying stock price is $60 and the strike price is $55. a. Is there an arbitrage opportunity? b. Describe exactly what a trader should do to take advantage of the arbitrage opportunity assuming it exists. c. Determine the present value of the profit that the trader can earn assuming you identify an arbitrage opportunity. Use at least four decimal places for those questions that require a numerical answer.A futures contract will mature in one time step. The current return over one time-step is R = 1.01 and the underlying asset of the future contract is currently worth $27 and has up factor u = 1.1 and down factor d = 0.9. The margin account for the short side of this futures contract currently holds $16. How much will the margin account hold when the futures contract matures if the underlying asset increases in value?Suppose you work as a broker in an investment company, and there is an expectation that the market interest rate will be 0.031. based on this expectation you are required to calculate the market price for the following CD; Issue date: 1 January 2021 Maturity date:10 May 2021. The face value OMR 10000. Interest on CD: 5 percent.
- Suppose that the September 90-day Eurodollar futures contract has a price of $96.4 today. A firm expects to borrow $50 million for 3 months in September at the LIBOR, and intends to use the Eurodollar futures contract to hedge its future borrowing rate. a) What rate can the firm secure today by using the Eurodollar contract? b) Will the firm go long or short the Eurodollar contract? How many contracts will it buy/sell? c) Suppose that the spot 3-month LIBOR is 4% (annualized) in September. Explain how the firm met its objective of locking in a return on its future borrowing.Futures Contracts | WSJ.com/commodities Metal & Petroleum Futures Contract Open High hi lo low Copper-High (CMX)-25,000 lbs.; $ per lb. Contract Open Open High hi lo low Settle Chg interest Open Coffee (ICE-US)-37,500 lbs.; cents per lb. Settle Chg interest Dec 194.00 205.55 192.95 204.05 10.05 129,6% March 22 196.95 208.35 195.80 206.90 10.10 70,796 Sugar-World (ICE-US)-112,000 lbs.; cents per lb. Oct 4.1500 4.2030 4.1500 Dec 4.1065 4.2030 4.0585 4.1885 40.1935 0.1035 0.0995 2,734 109,717 March 20.31 20.35 20.02 20.06 -.28 420,744 May 19.72 19.75 19.48 19.53 .23 156,809 Oct Gold (CMX)-100 troy oz.; $ per troy oz. 1754.30 1762.60 1748.50 Sugar-Domestic (ICE-US)-112,000 lbs.; cents per lb. 1757.00 1.70 Nov 1755.90 1764.30 1750.00 1757.70 1.40 4,163 1,093 Nov 37.00 37.01 37.00 37.00 -.05 1,265 March'22 36.00 36.01 36.00 36.00 -.10 2,819 Dec 1757.20 1765.20 1749.90 1758.40 1.40 407,321 Feb 22 1759.10 1766.40 1751.60 1760.10 1.60 46,135 Cotton (ICE-US)-50,000 lbs.; cents per lb. Oct Oct…Consider a hypothetical futures contract where the current price is $ 212. The initial margin requirement is $ 10 and the maintenance margin requirement is $ 8. You enter into long 20 contracts and meet all margin requirements, but do not withdraw any excess margin. B. Complete the table below and explain all deposited funds. Suppose the contract was purchased at the settlement price of that day, so there is no gain or loss at current market prices on the day of purchase. C. What is your total profit or loss by the end of Day 6?