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An investor take a short position in four 3 months futures contract on Pepsi. Each contract is for 12000 units (litres) of underlying. The actual
An investor take a short position in four 3 months futures contract on Pepsi. Each contract is for 12000 units (litres) of underlying. The actual price of contract is 2,60PLN/litre. a) What should the price of Pepsi be on the market at the time of exercising the contract, if the investor wants to achieve profit of 8000PLN? b) How much should he/she deposit on the margin account taking a position if the maintenance margin level is 10% of the contract and the initial margin level is 20% higher than maintenance margin level? c) One week after taking the position the price of the forward contract is 2,70PLN/litre? What is the state of the margin account after this week. Assume that during this week there was no withdrawal nor need of additional payment to the margin account. Is there any need to pay something now to the margin account or possibility to withdraw some money? If so, how much (to pay or to withdraw)
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