Answer:
$58,750
Step-by-step explanation:
Calculation to Determine the total dollar amount of profit or loss from this futures contract
First step is to find the Forward premium
Forward premium = (1 + .07)/ (1 + .12) -1
Forward premium= -.04464
Second step is to find the Forward rate
Forward rate = $.42 x (1 - .044640)
Forward rate=$.42×0.95536
Forward rate= $.40125
Last step is to find the profit
Profit = ($.46 - $.40125) × 1,000,000
Profit=0.05875× 1,000,000
Profit = $58,750
Therefore the total dollar amount of profit from this futures contract will be $58,750