Interview Question: We Would Have Gotten Very Rich If Only…

Sample Question #218 (finance – ROI)

I’ll give you the following facts: since February this year, the crude oil futures price (on NYMEX) has gone from $50 to $86 per barrel. Each crude oil futures contract covers 1,000 barrels, which means at $50 a barrel, a contract is worth $50,000. The initial margin of a contract is $4,000 and the maintenance margin is $3,500. [Note: these margin numbers may not be current.]

Now, if you bought a contract at $50 in early February, what’s the ROI you would have made by now?

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One Response to Interview Question: We Would Have Gotten Very Rich If Only…

  1. Brett says:

    ANSWER
     
    (86-50) * 1000 / 4000 – 1 = 800% net return
     
    (Bonus question: can you annualize this return?)
     

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