# 2008 exam problem # 11

I have issues with this problem. In part A- the number of futures I got 9000 contracts for \$ which is in the solution. Now doing part B, they dropped millions and got rid of zeros- fine with me. But how do you arrive at 900 contracts? Each contract is still 100,000 units right? I am really hung up on this. I spent last hour to figure this out. HELP PLEASE !!!

derswap07, The size of each futures contract is irrelevant. It is that # of contract which is used to calculate P/L of the futures contract . As long as all amounts are in unit of million, it is OK.

AMC, When calculating the P/L for futures, you multiply by the number of futures contracts right? In this problem, I multiplied by 9000 and they by 900. This is why my answer was totally wrong- way off.

derswap07, You are right. I think CFAI made big mistakes. How come you are the 1st one found it ? I think the size of each futures contract shall be 1M for both which make 700/900 contacts.

I am glad that you agree with me AMC. I feel much better now. Anybody else out there who can see this too?

derswap07, I am very sorry to advise you that CFAI shall be correct and we are wrong. It is the amount (not contract number) which shall be used to calculate P/L. The amounts used to calculate P/L shall be 900M/700M. i.e.,both the size of each futures contract and # of futures contract are irrelevant. Please refer to R40 of CFAI text. I am very sorry for my mistake.

AMC, You should be able to calculate it both ways though. I take this solution now and move on-it makes sense. THanks

derswap07, As long as you can get right answer and you are comfortable with it, itâ€™s OK !