The Futures Price of Gold Is $1,000

question 24

Essay

The futures price of gold is $1,000. Futures contracts are for 100 ounces of gold, and the margin requirement is $3,000 a contract. The maintenance market requirement is $1,500. A speculator expects the price of gold to rise and enters into a contract to buy gold.
a. How much must the speculator initially remit?
b. If the futures price of gold rises to $1,005, what is the profit and return on the position?
c. If the futures price of gold declines to $998, what is the loss on the position?
d. If the futures price declines to $984, what must the speculator do?
e. If the futures price continues to decline to $982, how much does the speculator have in the account?

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Definitions:

Humanistic Perspective

is an approach in psychology that emphasizes individual potential for growth and the importance of human values, creativity, and self-fulfillment.

Self-efficacy

An individual's belief in their own capability to successfully complete tasks or achieve goals.

Feelings of Inferiority

An individual's persistent sense of inadequacy or lack of self-worth compared to others, which can influence motivation and behavior.

Alfred Adler

An Austrian medical doctor and psychotherapist who founded the school of individual psychology and emphasized the importance of feelings of inferiority in the development of personality.