Gold (CMX) 100 troy oz.; $ per troy oz.

$\begin{array}{|l|r|r|r|r|r|r|r|r|}
\hline & \text { Open } & \text { High } & \text { Low } & \text { Settle } & \text { \$Chg } & \text { Sea. Hi } & \text { Sea. Lo } & \text { Op. Int. } \
\hline \text { December } & 384.00 & 389.50 & 382.20 & 384.60 & 0.20 & 394.80 & 280.00 & 183.612 \
\hline \text { April } & 385.00 & 391.00 & 385.00 & 387.10 & 0.15 & 395.70 & 287.00 & 10,167 \
\hline
\end{array}$

-A corn futures contract was purchased for $1.50 per bushel on July 1. Each contract is for 5,000 bushels. The contract is sold for $1.60 per bushel on October 1. What is the holding-period return?
A) 6.25%
B) 6.67%
C) 5.75%
D) 7.25%
E) 7.00%

Question

Gold (CMX) 100 troy oz.; $ per troy oz.

$\begin{array}{|l|r|r|r|r|r|r|r|r|}
\hline & \text { Open } & \text { High } & \text { Low } & \text { Settle } & \text { \$Chg } & \text { Sea. Hi } & \text { Sea. Lo } & \text { Op. Int. } \
\hline \text { December } & 384.00 & 389.50 & 382.20 & 384.60 & 0.20 & 394.80 & 280.00 & 183.612 \
\hline \text { April } & 385.00 & 391.00 & 385.00 & 387.10 & 0.15 & 395.70 & 287.00 & 10,167 \
\hline
\end{array}$

-A corn futures contract was purchased for $1.50 per bushel on July 1. Each contract is for 5,000 bushels. The contract is sold for $1.60 per bushel on October 1. What is the holding-period return?
A) 6.25%
B) 6.67%
C) 5.75%
D) 7.25%
E) 7.00%

Quizplus · Accepted Answer

The initial investment is the price per bushel times the number of bushels in the contract:

$1.50/bushel x 5,000 bushels = $7,500

The final investment (sale of the contract) is:

$1.60/bushel x 5,000 bushels = $8,000

The holding-period return is:

($8,000 - $7,500) / $7,500 = 0.067 or 6.67%

Therefore, the answer is B.

Gold (CMX) 100 Troy Oz -A Corn Futures Contract Was Purchased for $1