Problem 3-13 Using Futures Quotations (LO3, CFA4) Use the following corn futures

Question

Problem 3-13 Using Futures Quotations (LO3, CFA4) Use the following corn futures quotes: Corn 5,000 bushels Contract Open HighLow Settle Chg Open Int Month Mar May July Sep 455.125 457.000 451.750 452.000 -2.750 597,913 467.000 468.000 463.000 463.250-2.750 137,547 477.000 477.500 472.500 473.000-2.000 153,164 475.000 475.500 471.750 472.250 -2.000 29,258 Suppose you buy 34 of the September corn futures contracts at the last price of the day. One month from now, the futures price of this contract is 465.25, and you close out your position. Calculate your dollar profit on this investment. (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete but not entirely correct. Dollar profit $ 238.00

Explanation / Answer

The Sep corn futures is bought at the last price of the day whichust be the settling price or closing price of the day.

Purchase price = 472.25$

Price after 1 month at closing= 465.25$

Loss= 472.25- 465.25$= 238.00$

Therefore it is a loss not profit on this investment.

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