Details of this Paper

Currently EURO contracts (125,000 EURO each) are t...

Description

Solution


Question

Currently EURO contracts (125,000 EURO each) are traded at $0.8470. Spot rate is $0.8310 (ie EUR/USD 0.8310). Assume that a speculator bought 80 Euro futures contract (Euro10,000,000). Suppose speculator liquidated the contract one month later, when the contract closed at $0.8600. If the initial margin for each Euro contract is USD2,000, what is the annualized return to the speculator in this contract (NOTE:calculate simple annual return not compounded)?

 

Paper#11911 | Written in 18-Jul-2015

Price : $25
SiteLock