Question
Consider a hypothetical futures contract in which the current price is $212. The initial margin requirement is $10, and the maintenance margin requirement is $8.
Consider a hypothetical futures contract in which the current price is $212. The initial margin requirement is $10, and the maintenance margin requirement is $8. You go long 20 contracts and meet all margin calls but do not withdraw any excess margin.
A. When could there be a margin call?
B. Complete the table below and explain any funds deposited. Assume that the contract is purchased at the settlement price of that day so there is no mark-to-market profit or loss on the day of purchase.
Day | Beginning Balance | Funds Deposited | Futures Price | Price Change | Gain/Loss | Ending Balance |
0 | 212 | |||||
1 | 211 | |||||
2 | 214 | |||||
3 | 209 | |||||
4 | 210 | |||||
5 | 204 | |||||
6 | 202 |
C. How much are your total gains or losses by the end of day 6?
Step by Step Solution
3.41 Rating (157 Votes )
There are 3 Steps involved in it
Step: 1
When the ending balance that is the beginning balance fall below 160 a margin calls is made and you ...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get StartedRecommended Textbook for
Economics Today
Authors: Roger LeRoy Miller
16th edition
132554615, 978-0132554619
Students also viewed these Accounting questions
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
View Answer in SolutionInn App