Question

Suppose you are holding a long position in a French franc futures contract that matures in 76 days. The agreed upon price is $0.15 for FF 250,000. At the close of trading today, the futures price has risen to $0.155. Under marking to market, you now a. hold a futures contract that has risen in value by $1,250 b. hold a futures contract that has fallen in value by $625 c. will receive $1,250 and a new futures contract priced at $0.155 d. must pay over $1,250 to the seller of the futures contract

Answer 1

Answer: c. will receive $1,250 and a new futures contract priced at $0.155.

Step-by-step explanation:

Based on the information given in the question, Under marking to market, since we've been informed that the future price has increased from $0.150 to $0.155, then a profit of $125 will be made.

= $0.005 x 250,000

= $1,250,

Since the futures price has risen to $0.155, under marking to market, you now will receive $1,250 and a new futures contract priced at $0.155