1c. One futures contract on gold is equal to 100 ounces of gold. On Dec. 5,...

      

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1c. One futures contract on gold is equal to 100 ounces of gold. On Dec. 5, 2023 the gold futures contract for February delivery closed at about $2,040 per ounce. The initial margin for a gold contract is $8,580. Approximately what is the leverage an investor enjoys by trading this commodity? Value of contract = 100 x $2,040/lb = $204,000 Initial margin = $8,580 Leverage = $204,000/$8,580 = 2a. On Dec 5, 2023, the March E-Mini S&P 500 contract closed at 4638.50. What was the total value represented by one E-Mini S&P contract as of the day of that close? 2b. If you think the S&P index is likely to go down in the near future, would you buy or sell an S&P futures contract? 2c. Assume that in two weeks, the contract closes at 4600. Also assume you entered the trade you answered in part b at the closing price on Dec. 5. What would be the dollar amount of your profit or loss in two weeks? Explain how you arrived at your answer. 2d. Currently, the initial margin requirement for an E-Mini S&P futures contract is $12,320. Given the profit or loss you found in part c, calculate your percentage profit or loss on the trade, given what you had invested (the initial margin requirement). 1c. One futures contract on gold is equal to 100 ounces of gold. On Dec. 5, 2023 the gold futures contract for February delivery closed at about $2,040 per ounce. The initial margin for a gold contract is $8,580. Approximately what is the leverage an investor enjoys by trading this commodity? Value of contract = 100 x $2,040/lb = $204,000 Initial margin = $8,580 Leverage = $204,000/$8,580 = 2a. On Dec 5, 2023, the March E-Mini S&P 500 contract closed at 4638.50. What was the total value represented by one E-Mini S&P contract as of the day of that close? 2b. If you think the S&P index is likely to go down in the near future, would you buy or sell an S&P futures contract? 2c. Assume that in two weeks, the contract closes at 4600. Also assume you entered the trade you answered in part b at the closing price on Dec. 5. What would be the dollar amount of your profit or loss in two weeks? Explain how you arrived at your answer. 2d. Currently, the initial margin requirement for an E-Mini S&P futures contract is $12,320. Given the profit or loss you found in part c, calculate your percentage profit or loss on the trade, given what you had invested (the initial margin requirement).

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Answer To calculate the leverage an investor enjoys by trading this commodity we ... View the full answer