A commodity trader borrowed a sum of ₹ 6,50,000 @ 12% p.a. for a period of 3 months. This fund was used to buy 2 Kg gold @ ₹ 2,950 per gram and paid a sum of ₹ 5,90,000 towards cost of physical gold. The Trader sold 2 kg

CS Professional · Capital Commodity and Money Market · PYQS · December 2017
A commodity trader borrowed a sum of ₹ 6,50,000 @ 12% p.a. for a period of 3 months. This fund was used to buy 2 Kg gold @ ₹ 2,950 per gram and paid a sum of ₹ 5,90,000 towards cost of physical gold. The Trader sold 2 kg gold in future of 3 months in the commodity exchange @ ₹ 3,000 per gram. The Trader paid ₹ 60,000 to the broker towards margin as well as maintenance margin for this transaction. After 3 months the Trader squared off the future transaction of gold @ ₹ 3,050 per gram. The Trader also sold the physical Gold @ ₹ 3,050 per gram. Calculate the Net gain/loss made by the trader.

Answer & Explanation:

Funds Borrowed = ₹ 6,50,000 Interest @ 12% for 3 months = ₹ 19,500 Total Cost = ₹ 6,69,500 Cost of Physical Gold = ₹ 2950 x 2000 = ₹ 5,90,000 ₹ 60,000 was paid to the Broker towards margin as well as maintenance margin for this transaction. Loss of gold transaction in exchange: ₹ (3,050 - 3,000) x 2000 = ₹ 1,00,000 Profit in Physical Gold: ₹ (3050 - 2950) x 2000 = ₹ 2,00,000 Profit in the Transaction = ₹ 1,00,000 Less: Interest Paid on Borrowed Capital = ₹ 19,500 Net Profit to the Trader in the Transaction = ₹ 80,500

Topics: Commodity Market

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic