Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need help with the finance questions on the attachment. thanks 1)One futures contract on orange juice is equal to 15,000 lbs. of juice. Assume

image text in transcribed

I need help with the finance questions on the attachment.

thanks

image text in transcribed 1)One futures contract on orange juice is equal to 15,000 lbs. of juice. Assume that the contract is trading at around $ 1.46/lb. If the initial margin for an orange juice contract is $1,320, approximately what is the leverage an investor enjoys by trading this commodity? The \"big\" S&P stock index futures contract trades only \"in the pit,\" whereas the \"E-mini\" S&P contract trades only electronically. The E-mini contract is worth 1/5 of the value of the \"big\" contract. 2)Recently, the E-mini contract closed at 2065. What was the total value represented by one E-mini S&P contract as of the day of that close? 3)If you think the S&P index is likely to go up in the near future, would you buy or sell an E-mini futures contract? 4)Based on the margin requirements given at: http://www.eltee.de/en/usefulsmargins.php how much initial margin would you have to put up to buy or sell 1 contract? Assume that in two weeks, the contract closes at 2000. What would be your profit or loss, given the action you answered for question 3? 5) Assume now that the trade went against you, i.e., the price of the contract goes down instead of up. At what contract price would you have gotten a margin call? How much additional margin will you need to deposit in your account? 6)

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

Recommended Textbook for

Management Science The Art Of Modeling With Spreadsheets

Authors: Stephen G. Powell, Kenneth R. Baker

3rd Edition

0470530677, 978-0470530672

More Books

Students also viewed these Finance questions

Question

Discuss some of the limitations of profit measurement. LO8

Answered: 1 week ago