Question
1. Sammy buys 2 March 2022 corn contracts when the quote is 525'4. What is the total value of this position? A. $26,275 B. $36,550
1. Sammy buys 2 March 2022 corn contracts when the quote is 525'4.
What is the total value of this position?
| A. | $26,275 | |
| B. | $36,550 | |
| C. | $52,550 | |
| D. | $65,700 |
2. Sammy buys 2 March 2022 corn contracts when the quote is 525'4. Sammy's broker requires an initial margin of 12%.
What is the toal amount Sammy has to pay when he makes his trade?
| A. | $6,306 | |
| B. | $16,550 | |
| C. | $52,550 | |
| D. | $55,700 |
3. Sammy buys 2 March 2022 corn futures contracts at a quote of 525'4. His broker requires a 12% margin. He is trading on the CME futures exchange.
One the first day after his purchase, the price of corn drops to 519'2. What is his margin account level using 519'2 as the settlement price?
| A. | $3,566 | |
| B. | $4,578 | |
| C. | $5,681 | |
| D. | $6,799 |
4. Sammy buys 2 March 2022 corn futures contracts at a quote of 525'4. His broker requires a 12% margin. He is trading on the CME futures exchange.
On the first day after his purchase, the price of corn drops to 519'2. Will Sammy receive a margin call and if so, how much must he add to his account?
| A. | NO, he does not receive a margin call, nothing need be added to his account | |
| B. | YES, he receives a margin call, and $2,000 must be added to his account | |
| C. | YES, he receives a margin call, and $2,500 must be added to his account | |
| D. | YES, he receives a margin call, and $5,000 must be added to his account |
5. Sammy buys 2 March 2022 corn futures contracts at a quote of 525'4. His broker requires a 12% margin. He is trading on the CME futures exchange.
On the first day after his purchase, the price of corn drops to 519'2.
On the second day after his purchase the price of corn drops to 509'6.
Will Sammy receive a margin call and if so, how much must he add to his account?
| A. | NO, he does not receive a margin call, nothing need be added to his account | |
| B. | YES, he receives a margin call, and $1,850 must be added to his account | |
| C. | YES, he receives a margin call, and $2,225 must be added to his account | |
| D. | YES, he receives a margin call, and $5,000 must be added to his account |
6. Sammy buys 2 March 2022 corn futures contracts at a quote of 525'4. His broker requires a 12% margin. He is trading on the CME futures exchange.
On the first day after his purchase, the price of corn drops to 519'2.
On the second day after his purchase the price of corn drops to 509'6.
On the third day after his purchase the price of corn drops to 4.92'0.
Will Sammy receive a margin call and if so, how much must he add to his account?
| A. | NO, he does not receive a margin call, nothing need be added to his account | |
| B. | YES, he receives a margin call, and $1,850 must be added to his account | |
| C. | YES, he receives a margin call, and $2,225 must be added to his account | |
| D. | YES, he receives a margin call, and $3,350 must be added to his account |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Horngrens Financial and Managerial Accounting
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
4th Edition
978-0133251241, 9780133427516, 133251241, 013342751X, 978-0133255584
