The Futures Price of a Metal Is $250 an Ounce $\$ 255$

question 36

Essay

The futures price of a metal is $250 an ounce. Futures contracts are for 100 ounces, and the margin requirement is $3,000 a contract. The maintenance market requirement is $1,500. A speculator expects the price to rise and enters into a contract to buy the metal.​ a. How much must the speculat or initially remit?
b. If the futures price rises to $\$ 255$ , what is the profit and return on the position?
c. If the futures price declines to $\$ 2.48$ , what is the loss on the position?
f. If the futures price declines to $\$ 2.34$ , what must the speculator do?
e. If the futures price continues to decline to $\$ 2.32$ , how much does the speculator have in the account? ​

---

Definitions:

Total Cost

The complete cost of production which includes both fixed and variable costs.

Profit Maximizes

The process or strategy of adjusting production and sales to achieve the highest possible profit.

Same Price

Indicates a situation where an item or service is offered for sale at an identical monetary value in different contexts or locations.

Monopolist

A single seller in a market who has significant control over the price and supply of a unique product or service.