One contract is = 125,000 Margin = your equity position.

Initial Margin = the amount of money you must put into an account to open the futures position. This is still your money as you have not bought the contract, instead the margin amount is your escrow (or good faith) money to assure you will be able to pay for a loss to you in the contract. Maintenance Margin = The minimum amount allowed in your margin account. Below that amount the futures position may be closed if you do not add funds to your account. Margin Call = When your account reaches the Maintenance level and the futures broker calls you asking for more money.

1. You want to enter 3 March contracts to buy euros at $1.17. The Initial Margin requirement is 3% and the Maintenance requirement is 30% of Initial Margin requirement. a. What is the Initial Margin dollar amount? b. At what margin amount will you receive a margin call? c. At what exchange rate will you receive a margin call?

2. You want to enter 1 March contract to sell euros at $1.17. The Initial Margin requirement is 2% and the Maintenance requirement is 30% of Initial Margin requirement. a. What is the Initial Margin dollar amount? d. At what margin amount will you receive a margin call? c. At what exchange rate will you receive a margin call?

3. You want to enter 2 March contracts to buy euros at $1.15. The Initial Margin requirement is 3% and the Maintenance requirement is 30% of Initial Margin requirement. a. What is the Initial Margin dollar amount? b. At what margin amount will you receive a margin call? c. At what exchange rate will you receive a margin call?

4. You want to enter 2 March contract to sell euros at $1.20. The Initial Margin requirement is 3% and the Maintenance requirement is 30% of Initial Margin requirement. a. What is the Initial Margin dollar amount? b. At what margin amount will you receive a margin call? d. At what exchange rate will you receive a margin call?

5. For Problem #1, if the exchange rate goes to $1.14/1 what will be the gain or loss on your futures contracts?

6. For Problem #1, if the exchange rate goes to $1.22/1 what will be the gain or loss on your futures contract?

7. You have to buy 145,000 in 90 days and the 90 day forward rate is $1.20. You go long one euro contract for 125,000 at the $1.20 rate. After 90 days the actual spot rate is $1.13 and you buy the 145,000 euros. Including your gain or loss on the futures contract what is your net total cost for the 145,000 euros and what is the cost per euro?

8. Four days ago, you entered into a futures contract to sell 125,000 at $1.15 per . Over the past three days the contract has settled at $1.16, $1.17, and $1.18. You have not taken any money out of your account. How much have you made or lost?