Question
In: Finance
Consider a hypothetical futures contract in which the current price is $82. The initial margin requirement...
Consider a hypothetical futures contract in which the current price is $82. The initial margin requirement is $5, and the maintenance margin requirement is $2. You go long 20 contracts and meet all margin calls, but do not withdraw any excess margin. The settlement price and spot price look like this:
|
Day |
Settlement Price |
Spot Price |
|
0 |
82 |
80 |
|
1 |
84 |
81 |
|
2 |
78 |
80 |
|
3 |
73 |
75 |
|
4 |
79 |
77 |
|
5 |
82 |
86 |
|
6 |
84 |
90 |
1. Suppose you receive margin call at the beginning of the day, when your account is equal and less than maintenance margin. Which is the first day that you will receive margin call at the beginning of that day?
2. What is the total amount that you are going to put your account from day 0 to day 6?
3. What is the total loss and profit from day 0 to day 6, if the long holder always stays in the market?
Please do out work
Solutions
jeff jeffy answered 4 months agoRelated Solutions
Consider a hypothetical futures contract in which the current price is $82. The initial margin requirement...
Consider a hypothetical futures contract in which the current
price is $82. The initial margin requirement is $5, and the
maintenance margin requirement is $2. You go long 20 contracts and
meet all margin calls but do not withdraw any excess margin.
The settlement price and the spot price of the underlying from
day 0 to day 6 look like the following:
Day
Settlement Price
0
82
1
84
2
78
3
73
4
79
5
82
6
84
(1) Suppose...
Consider a hypothetical futures contract in which the current price is $82. The initial margin requirement...
Consider a hypothetical futures contract in which the current
price is $82. The initial margin requirement is $5, and the
maintenance margin requirement is $2. You go long 20 contracts and
meet all margin calls but do not withdraw any excess margin.
The settlement price and the spot price of the underlying from
day 0 to day 6 look like the following:
Day
Settlement Price
0
82
1
84
2
78
3
73
4
79
5
82
6
84
(1) Suppose...
Consider a hypothetical futures contract in which the current price is $82. The initial margin requirement...
Consider a hypothetical futures contract in which the current
price is $82. The initial margin requirement is $5, and the
maintenance margin requirement is $2. You go long 20 contracts and
meet all margin calls but do not withdraw any excess margin.
The settlement price and the spot price of the underlying from
day 0 to day 6 look like the following:
Day
Settlement Price
Spot Price of the Underlying
0
82
80
1
84
81
2
78
80
3...
1. You purchase an interest rate futures contract that has an initial margin requirement of 9%...
1. You purchase an interest rate futures contract that has an
initial margin requirement of 9% and a futures price of $130,538.
The contract has a $100,000 underlying par value bond. If the
futures price falls to $126,500, you will experience a ______ loss
on your money invested.
Multiple Choice
A 24.00%
B 57.37%
C 45.37%
D 34.37%
2. Malmentier SA stock is currently priced at $120, and it does
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The margin requirement on the S&P 500 futures contract is 10%, and the stock index is...
The margin requirement on the S&P 500 futures contract is
10%, and the stock index is currently 1,200. Each contract has a
multiplier of $250.
a. How much margin must be put up for each
contract sold?
Margin
$
b. If the futures price falls by 2% to 1,176,
what will happen to the margin account of an investor who holds one
contract? (Input the amount as a positive
value.)
Margin account (Click to select)increasesdecreases by $ .
c-1. What...
5. (5 pts) Consider a 125,000 euro futures contract in which the current future price is...
5. (5 pts) Consider a 125,000 euro futures
contract in which the current future price is $1.232 per euro. The
initial margin requirement is $2,310 per contract, and the
maintenance margin requirement is $2,100 per contract. You go short
10 contracts and meet all margin calls but do not
withdraw any excess margin. Assume that on the first day, the
contract is established at the settlement price, so there is no
mark-to-market gain or loss on that day.
Day
Required...
QUESTION 13 Suppose that the initial margin for a given futures contract decreases, but the maintenance...
QUESTION 13
Suppose that the initial margin for a given futures contract
decreases, but the maintenance margin remains the same. Which of
the following is true, all else being equal?
People who buy or sell this futures contract after the margin
change have the potential for more financial leverage than
before.
The change in the leverage requirement can make the contract
more affordable.
The range in which losses can occur without a margin call being
triggered will decrease.
All of...
Suppose a margin account has an initial margin requirement of 50% and a maintenance margin requirement...
Suppose a margin account has an initial margin requirement of
50% and a maintenance margin requirement of 25%.
The account currently has a balance of $10000, so the initial
buying power is $ ___
Suppose the total leverage is used to buy a stock at the price
of $5.00/share. When the stock price falls below the critical price
of $ ___ /share, a margin call will be sent to the account
holder
Your broker requires an initial margin of $4,500 per futures contract on soybeans and a maintenance...
Your broker requires an initial margin of $4,500 per
futures contract on soybeans and a maintenance
margin of $3,000 per contract. Each soybean futures
contracts are based on 5,000 bushels and quoted in cents per
bushel. Yesterday, you bought 5 soybean futures contracts at the
closing settlement price of 1372 (i.e., $13.72). Today, the
settlement quote is 1340. All margin calls restore margin levels to
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A Will you receive a margin call and if so,
for what...
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
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price of a three month European put option with strike price 1210?
Use the Black-Scholes formula to solve
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