Question: 5 if the market price for gasoline is 1427 per...
5. If the market price for gasoline is $1.427 per gallon on the day each of the following contracts expire (or in the case of the swap, on the day the payment is due), what is the payoff on the contract? (Indicate the amount and whether the party indicated receives or makes the payment.)
a. A short forward contract on 500000 gallons with a forward price of $1.441.
b. Three long futures contracts (each futures contract covers 40000 gallons) with a futures price of $1.441. (In this case, you should indicate the total net change in the margin account.)
c. A written call option on 200000 gallons with a strike price of $1.450.
d. An owned put option on 100000 gallons with a strike price of $1.455.
e. A swap (with “notional principal” in gallons) has terms: -240000(St-1.445).