Answer to Question #131329 in Finance for London Williams

Question #131329

Suppose that a trader enters into a long futures position for 1000 oil barrels with a delivery date on December 2016 and a future price of $40 per barrel. Suppose that on delivery date, the spot price of oil is $45 per barrel. What is the payoff to the long position?


1
Expert's answer
2020-09-01T11:22:02-0400

Spot price per barrel at maturity date "p_{1}=45"

Future price for each barrel "F_{0}=40"

Payoff of the future contract (long position) "=P_{1}-F_{0}=(45-40)\\times1000"

"=5000"



Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be the first!

Leave a comment

LATEST TUTORIALS
New on Blog
APPROVED BY CLIENTS