Tom buys two July futures contracts on frozen orange juice. Each contract is for the delivery...

Tom buys two July futures contracts on frozen orange juice. Each contract is for the delivery of 15,000 pounds. The current futures price is 160 cents per pound, the initial margin is $6,000 per contract, and the maintenance margin is $4,500 per contract. What price change would lead to a margin call? Under what circumstances $2,000 could be withdrawn from the margin account?

Expert Solution

jeff jeffy answered 8 months ago

trader buys two July futures contracts on frozen orange juice. Each contract is for the delivery...

trader buys two July futures contracts on frozen orange juice. Each contract is for the delivery of 15,000 pounds. The current futures price is 160 cents per pound, the initial margin is $6,000 per contract, and the maintenance margin is $4,500 per contract. What price change would lead to a margin call? Under what circumstances could $2,000 be withdrawn from the margin account?

A 6 month futures contract trades on orange juice futures. The current orange juice futures price...

A 6 month futures contract trades on orange juice futures. The current orange juice futures price is 1200, with volatility 18%. Interest rates are 0.5% (with continuous compounding). What is the price of a three month European put option with strike price 1210? Use the Black-Scholes formula to solve

Neocitrus corporation, a producer of frozen orange juice, claims that more than 20% of all orange-juice...

Neocitrus corporation, a producer of frozen orange juice, claims that more than 20% of all orange-juice drinkers prefer its product. To test the validity of this claim, a market researcher took a random sample of 400 orange-juice drinkers and found that 80 preferred the Neocitrus brand. (a) Does the sample evidence demonstrate the validity of the Neocitrus claim. Use significance level 5% a. State the hypotheses. b. State what kind of test you will be using: t-test or z-test. c....

Suppose the market for frozen orange juice is in equilibrium at a price of $ 1.00...

Suppose the market for frozen orange juice is in equilibrium at a price of $ 1.00 per can anda quantity of 4200 cans per month. Now suppose that at a price of $ 1.50 per can quantity demanded falls to 3000 cans per month and quantity supplied increases to 4500 cans per month compute the elasticity of supply for frozen orange juice between prices of $ 1.00 and $ 1.50. Explain your answer 3 points), 2 Katherine advertises to sell...

On 3 May 2019, a speculator buys five July 2019 US Soybeans futures contracts at a...

On 3 May 2019, a speculator buys five July 2019 US Soybeans futures contracts at a price of 842 cents per bushel. The speculator closes out her futures position on 30 May 2019 at a price of 888.88 cent per bushel. The US Soybeans futures contract is written on 5,000 bushels of soybeans and, for a speculator, the initial and maintenance margins are $3,375 and $2,500 per contract respectively. Assume that the speculator does not withdraw any excess out of...

Suppose the market for frozen orange juice is in equilibrium at a price of $2.00 per...

Suppose the market for frozen orange juice is in equilibrium at a price of $2.00 per can and a quantity of 4200 cans per month. Now suppose that at a price of $3.00 per can, quantity demanded falls to 3000 cans per month and quantity supplied increases to 4500 cans per month. Draw the appropriate diagram for this market. Calculate the price elasticity of demand for frozen orange juice between the prices of $2.00 and $3.00. Is the demand elastic...

An orange juice producer buys only one kind of oranges. The amount of juice squeezed from...

An orange juice producer buys only one kind of oranges. The amount of juice squeezed from each of these oranges is approximately normally distributed with a mean of 4.2 ounces and a population standard deviation of 1 ounce. If a sample of 100 oranges is selected: (a) What is the probability that the average juice squeezed is less than 4.15 ounces? (b) What is the probability that the average juice squeezed is more than 4.3 ounces? (c) What is the...

An orange juice producer buys oranges from a large orange grove that has one variety of...

An orange juice producer buys oranges from a large orange grove that has one variety of orange. The amount of juice squeezed from these oranges is approximately normally distributed, with a mean of 4.40 ounces and a standard deviation of 0.32 ounce. Suppose that you select a sample of 16 oranges. a. What is the probability that the sample mean amount of juice will be at least 4.27 ounces? b. The probability is 72% that the sample mean amount of...

An orange juice producer buys all oranges from a large orange-tree farm in Florida. The amount...

An orange juice producer buys all oranges from a large orange-tree farm in Florida. The amount of juice squeezed from a kilogram of these oranges is approximately normally distributed with a mean of 600 gr. and a standard deviation of 30 gr. Note: Make sure to specify the random variable and its distribution. Use the appropriate cumulative distribution table to compute the probability. (a) Using the Empirical Rule, evaluate approximately the probability that a given kilogram of oranges yields more...

What are futures contracts? Give an example of how a futures contract can be used as...

What are futures contracts? Give an example of how a futures contract can be used as protection against commodity price changes. Why did the price of the May WTI futures contract fall to about -$40. Is there a surplus of oil? What does this have to do with the state of the economy? Explain. Note: Each WTI contract is for 1000 barrels of oil, and each barrel contains 42 gallons. Please write at least 10 sentences.

Question