Suppose you purchase a May 2015 cocoa futures contract on 16 April 2015, at the last price of the day. What will your profit or loss be if the cocoa prices turn out to be $3,000 per metric ton at expiration? (Refer to Table 25.2 to help answer this question.)

Transcribed Image Text:

Table 25.2 Cocoa futures contract specification Description Symbol Contract Size Price Quotation Contract Listing Minimum Price Movement Settlement Daily Price Limit Deliverable Growths Delivery Points The Cocoa contract is the world benchmark for the global cocoa market. The contract prices the physical delivery of exchange-grade product from a variety of African, Asian and Central and South American origins to any of five US delivery ports. CC 10 metric tons $/metric ton March, May, July, September, December $1.00/metric ton, equivalent to $10.00 per contract Physical delivery None The growth of any country or clime, including new or yet unknown growths. Growths are divided into three classifications. Group A- Deliverable at a premium of $160/ton (including main crops of Ghana, Lom, Nigeria, Cte d'Ivoire and Sierra Leone). Group B-Deliverable at a premium of $80/ton (includes Bahia, Arriba, Venezuela, Sanchez, among others). Group C-Deliverable at par (includes Haiti, Malaysia and all others). Commencing with the July 2015 expiry, the growths of Peru and Colombia will be included in Group B. At licensed warehouses in the Port of New York District, Delaware River Port District, Port of Hampton Roads, Port of Albany or Port of Baltimore.