Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A broker requires an initial margin of RM3,000 and maintenance margin of RM1,000 before an investor can place any trade or in in the futures

A broker requires an initial margin of RM3,000 and maintenance margin of RM1,000 before an investor can place any trade or in in the futures market. a) What is the meaning of the statement above? b) An investor places one contract of a long position of Kuala Lumpur Index Futures at 1,500. This contract has a multiplier of RM100. At what spot price of Kuala Lumpur Index does the investor need to put up more funds to meet the initial margin required? c) If the investor is taking a short position of Kuala Lumpur Index Futures at 1,500, at what spot price of Kuala Lumpur Index does the broker start to call up for more funds?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions