Question

Part 1: You just heard a news story about mad cow disease in a neighboring country, and you believe that feeder cattle prices will rise dramatically in the next few months as buyers of cattle shift to U.S. suppliers. Someone else believes that prices will fall in the next few months because people will be afraid to eat beef. You go to the CME and find out that feeder cattle futures for delivery in April are currently quoted at 33.3. The contract size is 50,000 lbs. What is the market value of 1 contract

Answer 1

$16,650

Step-by-step explanation:

The computation for the market value of one contract is shown below:

= Size of the contract × current quoted price

where,

The Size of the contract is 50,000 lbs

and, the current quoted price is 0.333

So, the market value of one contract

= 50,000 lbs × 33.3 ÷ 100

= $16,650

hence, the market value of one contract is $16,650