The futures price of gold is $1,000. Futures contracts are for 100 ounces of gold, and the margin requirement is $3,000 a contract. The maintenance market requirement is $1,500. A speculator expects the price of gold to rise and enters into a contract to buy gold.
a. How much must the speculator initially remit?
b. If the futures price of gold rises to $1,005, what is the profit and return on the position?
c. If the futures price of gold declines to $998, what is the loss on the position?
d. If the futures price declines to $984, what must the speculator do?
e. If the futures price continues to decline to $982, how much does the speculator have in the account?

Question

The futures price of gold is $1,000. Futures contracts are for 100 ounces of gold, and the margin requirement is $3,000 a contract. The maintenance market requirement is $1,500. A speculator expects the price of gold to rise and enters into a contract to buy gold. 
a. How much must the speculator initially remit? 
b. If the futures price of gold rises to $1,005, what is the profit and return on the position? 
c. If the futures price of gold declines to $998, what is the loss on the position? 
d. If the futures price declines to $984, what must the speculator do? 
e. If the futures price continues to decline to $982, how much does the speculator have in the account?

Quizplus · Accepted Answer

The Answer of The futures price of gold is $1,000. Futures contracts are for 100 ounces of gold, and the margin requirement is $3,000 a contract. The maintenance market requirement is $1,500. A speculator expects the price of gold to rise and enters into a contract to buy gold. 
a. How much must the speculator initially remit? 
b. If the futures price of gold rises to $1,005, what is the profit and return on the position? 
c. If the futures price of gold declines to $998, what is the loss on the position? 
d. If the futures price declines to $984, what must the speculator do? 
e. If the futures price continues to decline to $982, how much does the speculator have in the account?

The Futures Price of Gold Is $1,000