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**Unformatted text preview: **price of the orange juice futures contract increases by 1000/15000 = $0.0667to 166.67 cents. 16. If F 1 and F 2 are the forward rates on 7/109 and 9/1/09, respectively and S is the spot rate on 1/10/10, then the profit on the first forward is $1,000,000(S-F 1 ) and that on the second is $1,000,000(F 2-S). The total payoff is then $1,000,000(F 2-F 1 ). (All exchange rates are in /$.) 23. Total profit = (0.9120 0.8830) $/lb * 40000 lb/ctt * 1 ctt = $1160 2009 profit = (0.9120 0.8880) $/lb * 40000 lb/ctt * 1 ctt = $960 The hedger would be taxed on the full $1160 in 2010, while the speculator would be taxed on the $960 in 2009 and the $200 in 2010. 26. There will be a margin call when $1000 has been lost from the margin account. This will occur when the price of the wheat futures contract increases by 1000/5000 = $0.20 to 470 cents. $1500 can be withdrawn from the account when the price of the wheat futures contract decreases by 1500/5000 = $0.30 to 420 cents....

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