(1) Suppose that you enter into a short futures contract to sell July silver for $10.20 per ounce on the New York Commodity Exchange. The size of the contract is 5000 ounces. The initial margin is $4000, and the maintenance margin is $3000. What price change would lead to a margin call? What happens if you do not meet a margin call? 4. Answer the following questions with reasoning in details. (5x10 points) (1) Suppose that you enter into a short futures contract to sell July silver for $10.20 per ounce on the New York Commodity Exchange. The size of the contract is 5000 ounces. The initial margin is $4000, and the maintenance margin is $3000. What price change would lead to a margin call? What happens if you do not meet a margin call? (2) A company has a $20 million portfolio with a beta of 1.2. It would like to use futures contracts on the S&P 500 to hedge its risk. The index futures price is currently 1080, and each contract is for delivery of $250 times the index. What is the hedge that minimizes risk? What should the company do if it wants to reduce the beta of the portfolio to 0.6? (3) An investor buys a European put on a share for $4. The stock price is $42 and the strike price is $40. Under what circumstances does the investor make a profit? Under what circumstances will the option be exercised? Draw a diagram showing the variation of the investor's profit with the stock price at the maturity of the option