Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

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)

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_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

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

Get Started

Recommended Textbook for

Regulating Effect Of Tax On Chinese National Income Distribution

Authors: Qingwang Guo, Bingyang Lv, Ximing Yue

1st Edition

113832969X,0429826753

More Books

Students also viewed these Finance questions

Question

Current skills levels and starting point of the targeted group

Answered: 1 week ago