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Samy is bullish on Reliance Industries and buys ten one month Reliance futures contracts at Rs. 2,96,00. On the last Friday of the month, Reliance Industries closes at Rs. 271 per shares. Samy makes a ______

Question

Samy is bullish on Reliance Industries and buys ten one month Reliance futures contracts at Rs. 2,96,00. On the last Friday of the month, Reliance Industries closes at Rs. 271 per shares. Samy makes a ______

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Solution

To answer this question, we first need to understand what a futures contract is. A futures contract is a legal agreement to buy or sell a particular commodity or asset at a predetermined price at a specified time in the future.

In this case, Samy bought ten one month Reliance futures contracts at Rs. 2,96,00. This means he agreed to buy Reliance Industries shares at this price in one month.

At the end of the month, the price of Reliance Industries shares is Rs. 271. This is lower than the price Samy agreed to pay for the shares.

To calculate the profit or loss, we subtract the closing price from the contract price and multiply by the number of contracts.

Profit or Loss = (Contract Price - Closing Price) * Number of Contracts

Profit or Loss = (29600 - 271) * 10

Profit or Loss = Rs. 2,63,290

Since the result is negative, Samy makes a loss of Rs. 2,63,290.

This problem has been solved

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