6. Yesterday, you entered into a futures contract to sell 62,500 at $1.50 per . Your initial performance bond is $1,500 and your maintenance level is $500. At what settlement price will you get a demand for additional funds to be posted?

A. $1.5160 per .

B. $1.208 per .

C. $1.1920 per

. D. $1.1840 per .

7. Yesterday, you entered into a futures contract to buy 62,500 at $1.50/. Your initial margin was $3,750. Your maintenance margin is $2,000 (meaning that your broker leaves you alone until your account balance falls to $2,000). At what settlement price do you get a margin call?

A. $1.4720/

B. $1.5280/

C. $1.500/

D. None of the above

8. Yesterday, you entered into a futures contract to sell 62,500 at $1.50/. Your initial margin was $3,750. Your maintenance margin is $2,000 (meaning that your broker leaves you alone until your account balance falls to $2,000). At what settlement price (use 4 decimal places) do you get a margin call?

A. $1.4720/

B. $1.5280/

C. $1.500/

D. None of the above

9. Three days ago, you entered into a futures contract to sell 62,500 at $1.50 per . Over the past three days the contract has settled at $1.50, $1.52, and $1.54. How much have you made or lost?

A. Lost $0.04 per or $2,500

B. Made $0.04 per or $2,500

C. Lost $0.06 per or $3,750

D. None of the above

10. Today's settlement price on a Chicago Mercantile Exchange (CME) Yen futures contract is $0.8011/100. Your margin account currently has a balance of $2,000. The next three days' settlement prices are $0.8057/100, $0.7996/100, and $0.7985/100. (The contractual size of one CME Yen contract is 12,500,000). If you have a short position in one futures contract, the changes in the margin account from daily marking-to-market will result in the balance of the margin account after the third day to be

A. $1,425.

B. $2,000

. C. $2,325

. D. $3,425.

11. Today's settlement price on a Chicago Mercantile Exchange (CME) Yen futures contract is $0.8011/100. Your margin account currently has a balance of $2,000. The next three days' settlement prices are $0.8057/100, $0.7996/100, and $0.7985/100. (The contractual size of one CME Yen contract is 12,500,000). If you have a long position in one futures contract, the changes in the margin account from daily marking-to-market, will result in the balance of the margin account after the third day to be

A. $1,425.

B. $1,675.

C. $2,000.

D. $3,425.

12. A European option is different from an American option in that

A. one is traded in Europe and one in traded in the United States.

B. European options can only be exercised at maturity; American options can be exercised anytime till maturity

. C. European options tend to be worth more than American options, ceteris paribus.

D. American options have a fixed exercise price; European options' exercise price is set at the average price of the underlying asset during the life of the option.

13. The current spot exchange rate is $1.55 = 1.00 and the three-month forward rate is $1.60 = 1.00. Consider a three-month American call option on 62,500. For this option to be considered at-the-money, the strike price must be

A. $1.60 = 1.00

B. $1.55 = 1.00

C. $1.55 (1+i$) 3/12 = 1.00 (1+i) 3/12

D. none of the above

14. The current spot exchange rate is $1.55 = 1.00 and the three-month forward rate is $1.60 = 1.00. Consider a three-month American call option on 62,500 with a strike price of $1.50 = 1.00. Immediate exercise of this option will generate a profit of

A. $6,125

B. $6,125/(1+i$) 3/12

C. negative profit, so exercise would not occur

D. $3,125