Four weeks ago, Alex purchased a 1-year futures contract on an index that has the following weekly closing prices: Week Index price 0 1050 1 1070 2 1090 3 1060 4 1010 You re given: The initial margin was 10% of index price and the maintenance margin is 90% of the initial margin. The continuously compounded interest rate is 5%. The contract is marked-to-market every weekend. Determine the first week Alex is required to make a deposit into his account. Possible Answers A Week 1 B Week 2 c Week 3 D Week 4 E No deposit is required during the first 4 weeks. Question HO Which of the following are TRUE regarding the differences between futures and forward contracts? Futures Forward contracts contracts I. Is the holder obligated to buy the underlying No Yes asset on the expiration date? II. Are the contracts tailored to the needs of each No Yes party? III. Are the contracts marked-to-market and Yes No settled daily? IV. Are the contracts relatively liquid? Yes No Possible Answers AI and II B II and III C III and IV DII, III, and IV E I, II, III and IV Question The current price of one share of RJC stock is 97.70. A call option on RJC stock with a strike price of 100.00 and nine months to expiration has a current price of 5.00. The continuously compounded risk-free interest rate is 4%. Mathew purchases 15 call options. What is his profit if one share of RJC stock at the end of 9 months is 108.00? Possible Answers A 2.85 B 42.72 C 81.33 D 109.87 E 120.00