Question
In: Finance
3. Last year you took a long position on Citibank stock (C) future with maturity date...
3. Last year you took a long position on Citibank stock (C) future with maturity date April 2020 at a price of $34.8/share (100 shares per contract). The initial margin requirement is 12%. On the future contract maturity date, Citibank stock price rises to $44.5/share. What is the stock future price on maturity date? What is the return rate of your investment (Hint: how much is your investment)?
4. Assume a future contract on Treasury Bonds with a face value of $100,000 is purchased at 93. How many T-bonds will be delivered under the contract (what is T-bond face value)? If the same future contract is later sold at 94.56, what is the profit/loss from the price movement? If initial margin is 10%, what is the return rate of the investment?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
a. Calculate the holding period returns for a long stock position and a long call position...
a. Calculate the holding period returns for a long stock
position and a long call position if the stock price is $30, $40
and $50 on the expiration date. Assuming the stock was purchased at
$40 and the call was purchased at $5.24 with exercise price of $40.
b. Compare your calculation results for Part a, explain why a
long position in call can provide leverage to the investor.
c. If the price of SAS stock had stayed at $40...
Explain the difference between a “long” and a “short” position in a stock. Explain if you...
Explain the difference between a “long” and a “short” position
in a stock. Explain if you would take a long or a short position in
the stock of a company that owns traditional mall properties.
How are the dividends paid to preferred stockholders different
from the dividends paid to common stock holders? In your response,
be sure to clearly define what it means to be perpetuity.
Explain the difference between the required rate of return and
the expected rate of...
Suppose that an investor enters a long position in futures on date 0. If the futures...
Suppose that an investor enters a long position in futures on
date 0. If the futures price increases on date 1, the investor's
margin account balance will increase.
Group of answer choices
True
False
2. Shell Co. took a short position on Dec 2020 Gasoline future at a price of...
2. Shell Co. took a short position on Dec 2020 Gasoline future
at a price of 2.99 ($ per gallon, and 42,000 gallons per contract)
and will hold the future contract till maturity date. The
initial margin requirement is 14% of notional value.
a) How much would Shell deposit to the
margin account at clearing house?
b) Suppose in Sept, the same future
contract is quoted 2.78. Based on marking to market, what would be
the margin account balance for...
Consider a portfolio consisting of a long position in one stock and a short position in...
Consider a portfolio consisting of a long position in one stock
and a short position
in two call options. Both the current stock price (S0) and the
exercise price (K) of call options
are $20. The call option costs $3.
a) Construct a table showing the payoffs and net profits for all
possible price ranges.
b) Draw a diagram showing the variation of an investor’s net profit
with the terminal stock
price
c) For what price range does this portfolio...
Consider a portfolio consisting of a long position in one stock and a short position in...
Consider a portfolio consisting of a long position in one stock
and a short position in two call options. Both the current stock
price (S0) and the exercise price (K) of call options are $20. The
call option costs $3.
a) Construct a table showing the payoffs and net profits for all
possible price ranges.
b) Draw a diagram showing the variation of an investor’s net
profit with the terminal stock price
c) For what price range does this portfolio...
Consider a portfolio consisting of a long position in one stock and a short position in...
Consider a portfolio consisting of a long position in one stock
and a short position in two call options. Both the current stock
price (S0) and the exercise price (K) of call options are $20. The
call option costs $3.
a) Construct a table showing the payoffs and net profits for all
possible price ranges.
b) Draw a diagram showing the variation of an investor’s net
profit with the terminal stock price
c) For what price range does this portfolio...
It’s been 2 months since you took a position as an assistant financial analyst at C...
It’s been 2 months since you took a position as an assistant
financial analyst at C aledonia Products. Although your boss has
been pleased with your work, he is still a bit hesitant about
unleashing you without supervision. Your next assignment involves
both the calculation of the cash flows associated with a new
investment under consideration and the evaluation of several
mutually exclusive projects. Given your lack of tenure at
Caledonia, you have been asked not only to provide a...
You took a 30-year half-million-dollar mortgage at 3% per year.What percent of your last payment...
You took a 30-year half-million-dollar mortgage at 3% per year.
What percent of your last payment goes to reduce principal?
A trader at the Kewar Stock Exchange took a SHORT POSITION in 100 shares of the...
A trader at the Kewar Stock Exchange took a SHORT
POSITION in 100 shares of the Mitha kora at Tk.46.00 per share. The
initial margin requirement was 40 percent while the maintenance
margin is 30 percent of current market price. Determine the initial
margin, maintenance margin, and the amount of replenishment if the
price of Pyera stock changes to (a) Tk.38.00, (b) Tk.48.00, and ©
Tk.52.00.
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