{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

2011 HW 3 Fall

2011 HW 3 Fall - Seongjae Lee Brigham Young University...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Seongjae Lee Brigham Young University Department of Finance ManEc 453 Money, Banking and Financial Markets Problem set #3 if I expect the copper price goe up, how do I leverage my position in futures market Due: September 21, 2011 Exercises : 1. Problem 15 & 16 on page 229 in Cecchetti Chapter 9 15; 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 $8,000 16:a) The return would be $2,500 2500 1. return if copper rises to $3.10 16:b) The return would be $267 266.6667 2. simply purchased $8,000 and sell in 1 year later 16:c) The risk involved this strategy is that if we take long postions in the futures market 3. 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
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}