The contract size for platinum futures is 50 troy ounces. Suppose you need 500 troy ounces of platinum and the current futures price is $1,265 per ounce. How many contracts do you need to purchase? How much will you pay for your platinum? What is your dollar profit if platinum sells for $1,290 a troy ounce when the futures contract expires? What if the price is $1,210 at expiration? a. Contracts to purchase b. Purchase price c. Dollar profit at $1,290 d. Dollar profit at $1,210

Question

Rory Mcfarland

Business

19 June, 02:29

The contract size for platinum futures is 50 troy ounces. Suppose you need 500 troy ounces of platinum and the current futures price is $1,265 per ounce. How many contracts do you need to purchase? How much will you pay for your platinum? What is your dollar profit if platinum sells for $1,290 a troy ounce when the futures contract expires? What if the price is $1,210 at expiration? a. Contracts to purchase b. Purchase price c. Dollar profit at $1,290 d. Dollar profit at $1,210

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Ben Roach · Answer 1

a) Contract to purchase = 500 troy ounces / 50 = 10 contracts

b) Purchase price = 500 ounces * $ 1265 = $ 632500

c) Dollar profit at $ 1290 = 500 ($ 1290 - $ 1265) = $ 12500

d) Dollar profit at $ 1290 = 500 ($1210 - $1265) = $ - 27500