Seongjae LeeBrigham Young UniversityDepartment of FinanceManEc 453Money, Banking and Financial MarketsProblem set #3if I expect the copper price goe up, how do I leverage my position in futures marketDue: September 21, 2011Exercises :1.Problem 15 & 16 on page 229 in Cecchetti Chapter 915;If we expect the price to rise in the futrue, I would take long positions on futures market.have $8000, copper is $3, margins is 25,000 pounds of copper is $8,00016:a)The return would be $2,50025001. return if copper rises to $3.1016:b)The return would be $267266.66672. simply purchased $8,000 and sell in 1 year later16:c)The risk involved this strategy is that if we take long postions in the futures market3. compare risk involved in these strategies.we would gain more profit than acutually buying $8,000 of copper and sell it 1 year later. But, if the price decreases, we might lose more money in futures market.2.After finding an appropriate futures contract on the futures page of the WSJ,September 20 copy, describe (including current prices) how you would use futures to
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