Assume the initial margin on a Swiss franc futures contract is $2,000. If an individual purchases a contract at $0.78 per franc and the contract involves 125,000 Swiss francs, what return on invested capital will the investor receive if the price per franc moves to $0.80?
A) 3%
B) 50%
C) 100%
D) 125%

Question

Quizplus · Accepted Answer

The investor's profit is ($0.80 - $0.78) * 125,000 = $2,500. The return on invested capital is $2,500 / $2,000 = 1.25, or 125%.

Assume the Initial Margin on a Swiss Franc Futures Contract