Question
No.4: The 20 Future contracts (1 future contract has 1000 kgs provision) of Coal state PKR/USD 155-158 as exercise price at its maturity in 03
No.4: The 20 Future contracts (1 future contract has 1000 kgs provision) of Coal state PKR/USD 155-158 as exercise price at its maturity in 03 months. The contracts are bought to hedge future position taken by an investor of coal by paying 20 USDs for 01 future contract. The future expected spot rates relevant to investor are 160, 155, 152, 162 and 165. The initial margin requirements for this investor are 20% and 10% maintenance margin requirements. You are required to compute; 1. Actual Margin at future expected prices 2. Margin Call price for this investment 3. Payoff profiles at prices given above.
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