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Ch 1_Solutions

# Ch 1_Solutions - CHAPTER 1 Problem 1.1 What is the...

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(b) The investor is obligated to sell pounds for 1.4000 when they are worth 1.4200. The loss is (1.4200-1.4000)×100,000 = \$2,000 Problem 1.6. A trader enters into a short cotton futures contract when the futures price is 50 cents per pound. The contract is for the delivery of 50,000 pounds. How much does the trader gain or lose if the cotton price at the end of the contract is (a) 48.20 cents per pound; (b) 51.30 cents per pound? (a) The trader sells for 50 cents per pound something that is worth 48.20 cents per pound. Gain (\$0 5000 \$0 4820) 50 000 \$900 = . - . , = . (b) The trader sells for 50 cents per pound something that is worth 51.30 cents per pound.
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Ch 1_Solutions - CHAPTER 1 Problem 1.1 What is the...

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