13. OneChicago has just introduced a single-stock futures contract on Brandex stock, a company that currently pays

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13. OneChicago has just introduced a single-stock futures contract on Brandex stock, a company that currently pays no dividends. Each contract calls for delivery of 1,000 shares of stock in 1 year. The T-bill rate is 6% per year.

a. If Brandex stock now sells at $120 per share, what should the futures price be?

b. If the Brandex price drops by 3%, what will be the change in the futures price and the change in the investor’s margin account?

c. If the margin on the contract is $12,000, what is the percentage return on the investor’s position?

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Investments

ISBN: 9780077261450

8th Edition

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

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Question Posted: Jul 24, 2024 05:05 AM

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13. OneChicago has just introduced a single-stock futures contract on Brandex stock, a company that currently pays

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Investments

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