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FNCE4040-Fall2017-Final- A Initials: 1 The following question has to do with the Eurodollar futures contract. Details of the contract are given at the beginning of the exam. (2 points) You believe that interest rates are going to increase and decide to trade the Feb. 2018 futures contract. Do you go long or short the contract? Circle the correct answer. 1 a Long Short 1 b (2 points) You trade 200 contracts at a price of 98.405. The maintenance margin is $150 and the initial margin is $165. How much margin are you required to post immediately after entering the position? 33,000 1 c (2 points) The settlement price at the end of the trading day is 98.425. How much money is in your margin account prior to any margin calls? If a margin call is required how much is it for? Margin Balance 23,000 Margin Call 10,000 1 d (4 points) Briefly explain the role of the clearing house and clearing house members in the functioning of the futures market. The clearing house is the counterparty on all futures trades. The clearing house members manage all positions and the distribution of margin. If there is a default that a broker cannot handle then the clearing house member must