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Eva8 [605]
2 years ago
5

Today is June. Suppose you buy a futures contract for 42,000 gallons of RBOB gasoline delivered in December. The contract settle

s at $1.50 per gallon today. You decide to exit in August, when the contract settles at $1.45 per gallon. Calculate your payoff from holding the position between June and August
Business
1 answer:
kvv77 [185]2 years ago
8 0

Answer:

The payoff from holding the position between June and August is $2,100 "loss"

Explanation:

Since I had gone long on the contract and it has gone down in value, I would be having a loss. The value of the loss will be:

= ($1.5 - $1.45) x 42,000 gallon of RBOB gasoline

= $0.05 * 42,000 gallon of RBOB gasoline

= $2,100 (Loss)

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