Question

1)

Use the following corn futures quotes:  

Corn 5,000 bushels
Contract Month	Open	High	Low	Settle	Chg	Open Int
Mar	455.125	457.000	451.750	452.000	−2.750	597,913
May	467.000	468.000	463.000	463.250	−2.750	137,547
July	477.000	477.500	472.500	473.000	−2.000	153,164
Sep	475.000	475.500	471.750	472.250	−2.000	29,258

   Suppose you buy 20 of the September corn futures contracts at the last price of the day. One month from now, the futures price of this contract is 462.75, and you close out your position. Calculate your dollar profit on this investment. (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

2)

Suppose you have $90,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $90 per share. You also notice that a call option with a $90 strike price and six months to maturity is available. The premium is $4.5. MMEE pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $97 per share? What about $86 per share? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Answer 1

Buying price of September Future will be (settle price)= 472.25

Close out position by selling (sale price)= 462.75

Contract size = 5000 bushels

No. of contracts = 20

formula for profit = (selling price - Buying price )*Contact size*No of futures

(462.75-472.25)*5000*20

-950000

buying and selling price are in cents. we will convert to Dollar by dividing it by 100

-950000/100=

-9500

So, dollar profit (loss) on Transaction is -$9500.

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