Rakesh, a commodity trader borrowed a sum of ₹1,00,00,000 (Rupees One Crore) @ 10% p.a. for a period of 3 months. This fund was used to buy 2 kg gold @ ₹4,400 per gram and due amount was paid. Rakesh sold 2 kg gold in fu

CS Professional · Capital Commodity and Money Market · PYQS · December 2021
Rakesh, a commodity trader borrowed a sum of ₹1,00,00,000 (Rupees One Crore) @ 10% p.a. for a period of 3 months. This fund was used to buy 2 kg gold @ ₹4,400 per gram and due amount was paid. Rakesh sold 2 kg gold in future of 3 months in the Commodity Exchange @ ₹4,500 per gram. The Trader paid ₹10,00,000 to the broker towards margin as well as maintenance margin for this transaction. After 3 months Rakesh squared off the future transaction of gold @ ₹4,500 per gram. The broker charged ₹8,000 as commission all-inclusive for this transaction. Rakesh sold the physical gold @ ₹4,500 per gram. Calculate the Net gain/Loss made by Rakesh.

Answer & Explanation:

Particulars Amount (₹) Total sum Borrowed 1,00,00,000 Interest for 3 months @ 10% PA 2,50,000 Amount spent on purchase of gold 2 kg @ 4,400 (2000 gm * 4400) 88,00,000 Balance left (1,00,00,000 - 88,00,000) 12,00,000 Margin paid to broker 10,00,000 Sale of gold in commodity market 4500 × 2000 gm (2kg) 90,00,000 After 3 months:- Future transactions squared off :- 4500 x 2000 gms (2kg) 90,00,000 Loss/profit in future (4500 - 4500) * 2000 NIL Commission paid to broker 8,000 Physical gold Sale of gold - 4500 × 2000 gms (2kg) 90,00,000 Purchase cost - 4400 × 2000 gms (2kg) 88,00,000 Profit / gain (90,00,000 - 88,00,000) 2,00,000 Less purchase paid (Commission) 8,000 Interest paid -2,50,000 Net loss (2,00,000 - 8,000 - 2,50,000) -58,000

Topics: Commodity Derivatives

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