1. a) Assume that you invested an initial margin of 20 percent of the amount that you would owe to purchase the S&P index at the settlement date. Measure your return from taking a position in the S&P index futures as follows. Take the difference determined above (which represents the dollar amount of the gain on the futures position) and divide it by the amount you originally invested (the amount you originally invested is percent of the dollar value of the futures contract that you purchased).

b) The return that you just derived in question 2 is not annualized. To annualize your return, multiply it by , where is the number of months in your school term