Answered step by step
Verified Expert Solution
Question
1 Approved Answer
OneChicago has just introduced a single-stock futures contract on Brandex stock, a company that currently pays no dividends. Each contract calls for delivery of 1,900
OneChicago has just introduced a single-stock futures contract on Brandex stock, a company that currently pays no dividends. Each contract calls for delivery of 1,900 shares of stock in 1 year. The T-bill rate is 8% per year. a. If Brandex stock now sells at $200 per share, what should the futures price be? (Round your answer to 2 decimal places.) Futures price 5 216.00 b. If the Brandex price drops by 5%, what will be the new futures price and the change in the investor's margin account? (Round "Futures price (new)" answer to 3 declmal places and other answer to the nearest dollar amount. Negative amount should be Indicated by a minus slgn.) S Futures price (new) Change in the investor's margin account 205.200 (21,600) S c. If the margin on the contract is $13,800. what is the percentage return on the investor's position? (Round your answer to 2 decimal places. Negative amount should be Indicated by a minus sign.) Percentage return on the investor's position (1.57) X %
Step by Step Solution
There are 3 Steps involved in it
Step: 1
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 Started