If you hold the futures contract until September 15^th and the spot rate for pounds on September 15^th is $1.67 per pound,you will: A) not exercise the futures contract. B) lose on your position by $1,250. C) gain on your position by $1,250. D) break even by the amount of the margin.

Question

Quizplus · Accepted Answer

Assuming each futures contract is for £62,500, and the contract is held until September 15^th when the spot rate for pounds is $1.67 per pound, the gain can be calculated as follows: (1.67 - 1.65) x 62,500 = $1,250 Since the spot rate is higher than the futures price, the long position would have gained $1,250. Therefore, the best choice is C.

If You Hold the Futures Contract Until September 15th and the Spot

If You Hold the Futures Contract Until September 15^th and the Spot