Question

crandall sold 10 futures contracts on copper at a price of $.8063 per pound. contracts on copper are set at 25,000 pounds. what is the amount of crandall's profit or loss if the price on the maturity date is $.8104?

Answer 1

Crandall's profit from selling 10 futures contracts on copper would be $1,025 when the price increased to $0.8104 per pound at maturity.

Step-by-step explanation:

Crandall sold 10 futures contracts on copper at a price of $0.8063 per pound. Each contract on copper is set at 25,000 pounds. To calculate Crandall's profit or loss when the price on the maturity date is $0.8104, we follow a few steps. The initial total value of a single contract is $20,157.50 (25,000 pounds × $0.8063 per pound), and the total initial value of 10 contracts is $201,575.00. On the maturity date, the total value of a single contract at the new price is $20,260 (25,000 pounds × $0.8104 per pound), and for 10 contracts, it would be $202,600.

Crandall's overall loss or profit can be calculated by subtracting the initial total value of the contracts from the total value at the new price. This results in a profit of $1,025 ($202,600 - $201,575). Hence, Crandall will have made a profit of $1,025 on the transaction.