1. The futures price of gold is $250. Futures contracts are for 100 ounces of gold, and the margin requirement is $3,000 a contract. The maintenance market requirement is $1,500. A speculator expects the price of gold to rise and enters into a contract to buy gold. If the futures price of gold rises to $255, what is the percentage return on the position?
A) 166.67%
B) 33.33%
C) 2.00%
D) 16.67%
2. Suppose that an industrial building can be purchased today for $2,500,000. If it is expected to produce cash flows of $180,000 for each of the next five years (assume CFs are received at the end of each year) and can be sold at the end of the fifth year for $2,800,000, what is the internal rate of return (IRR) on this investment?
0.09%
4.57%
9.20%
10.37%