You purchased a futures contract on corn at a futures

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Chapter 14 / Exercise PE14-1A
Accounting
Reeve/Warren
Expert Verified
79.You purchased a futures contract on corn at a futures price of 331, and at the time of expiration the price was 343. What was your profit or loss? 2-75
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Chapter 14 / Exercise PE14-1A
Accounting
Reeve/Warren
Expert Verified
A. -\$12.00B. \$12.00C. -\$600D.\$600There are 5,000 bushels per contract and prices are quoted in cents per bushel. Thus, your profit was (3.43 - 3.31) = \$0.12 per bushel, or \$0.12 × 5,000 = \$600.AACSB: AnalyticBlooms: ApplyDifficulty: BasicTopic: Derivatives Markets80.You sold a futures contract on corn at a futures price of 350 and at the time of expiration the price was 352. What was your profit or loss? A. \$2.00B. -\$2.00C. \$100D.-\$100There are 5,000 bushels per contract and prices are quoted in cents per bushel. Thus, your loss was (\$3.50 - 3.52) = \$0.02 per bushel, or -\$0.02 × 5,000 = -\$100.AACSB: AnalyticBlooms: ApplyDifficulty: BasicTopic: Derivatives Markets81.You sold a futures contract on corn at a futures price of 331 and at the time of expiration the price was 343. What was your profit or loss? 2-76
A. -\$12.00B. \$12.00C.-\$600D. \$600There are 5,000 bushels per contract and prices are quoted in cents per bushel. Thus, your profit was (3.31 - 3.43) = -\$0.12 per bushel, or -\$0.12 × 5,000 = -\$600.AACSB: AnalyticBlooms: ApplyDifficulty: BasicTopic: Derivatives Markets82.You purchased a futures contract on oats at a futures price of 233.75 and at the time of expiration the price was 261.25. What was your profit or loss? A.\$1375.00B. -\$1375.00C. -\$27.50D. \$27.50There are 5,000 bushels per contract and prices are quoted in cents per bushel. Thus, your profit was (2.6125 - 2.3375) = \$0.275 per bushel, or \$0.275 × 5,000 = \$1,375.AACSB: AnalyticBlooms: ApplyDifficulty: BasicTopic: Derivatives Markets83.You sold a futures contract on oats at a futures price of 233.75 and at the time of expiration the price was 261.25. What was your profit or loss? 2-77
A. \$1375.00B.-\$1375.00C. -\$27.50D. \$27.50There are 5,000 bushels per contract and prices are quoted in cents per bushel. Thus, your loss was (\$2.3375 - \$2.6125) = -\$0.275 per bushel, or -\$0.275 × 5,000 = -\$1,375.AACSB: AnalyticBlooms: ApplyDifficulty: BasicTopic: Derivatives MarketsShort Answer Questions84.Based on the information given, for a price-weighted index of the three stocks calculateA. the rate of return for the first period (t= 0 to t= 1).B. the value of the divisor in the second period (t= 2). Assume that Stock A had a 2-1 split during this period.C. the rate of return for the second period (t= 1 to t= 2). A. The price-weighted index at time 0 is (70 + 85 + 105)/3 = 86.67. The price-weighted index at time 1 is (72 + 81 + 98)/3 = 83.67. The return on the index is 83.67/86.67 - 1 = -3.46%.B. The divisor must change to reflect the stock split. Because nothing else fundamentally changed, the value of the index should remain 83.67. So the new divisor is (36 + 81 + 98)/83.67 = 2.57. The index value is (36 + 81 + 98)/2.57 = 83.67.2-78
C. The rate of return for the second period is 83.67/83.67 - 1 = 0.00%.AACSB: AnalyticBlooms: EvaluateDifficulty: ChallengeTopic: Market Indexes85.Based on the information given for the three stocks, calculate the first-period rates of return (from t= 0 to t= 1) onA. a market-value-weighted index.