Calculate the Profit or Loss Achieved by a Speculative Investment

question 74

Essay

Calculate the profit or loss achieved by a speculative investment in 10 March BAB futures contracts given the position was opened by buying the contracts at a price of 96.7 and later closed-out at a price of 96.9.

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Definitions:

Incremental Value

The additional value generated from a particular decision, investment, or action over its alternative.

Acquiring Firm

A company that purchases or takes control of another company through a merger, acquisition, or takeover.

Target Firm

A company that is the subject of a takeover attempt or an acquisition by another company.

NPV

A method used in capital budgeting to assess the profitability of an investment or project, calculating the difference between the present value of cash inflows and outflows.