You buy a forward contract on gold. The contract is for 1,000 ounces of gold at...

90.2K

Verified Solution

Question

Finance

You buy a forward contract on gold. The contract is for 1,000ounces of gold at a price of $1,271.10 an ounce and the currentmarket price for gold is $1,269.80 per ounce. The contract expiresin 6 months. The price at expiration for gold is $1325.65 perounce. As the buyer of the gold, what was your profit or loss aftertaking delivery on the contract?
$1,300
$54,550
$55,200
$55,850

Answer & Explanation Solved by verified expert

4.2 Ratings (509 Votes)

Solution In the case of a forward contract a If the spot price as on expiration date is below the forward price then the seller will receive the difference as a payment from the buyer a If the See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

You buy a forward contract on gold. The contract is for 1,000ounces of gold at a price of $1,271.10 an ounce and the currentmarket price for gold is $1,269.80 per ounce. The contract expiresin 6 months. The price at expiration for gold is $1325.65 perounce. As the buyer of the gold, what was your profit or loss aftertaking delivery on the contract?$1,300$54,550$55,200$55,850