Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Problem 29-03 You expect the stock market to increase, but instead of acquiring stock, you decide to acquire a stock index futures contract. That index
Problem 29-03 You expect the stock market to increase, but instead of acquiring stock, you decide to acquire a stock index futures contract. That index is currently 58.8, and the contract has a value that is $600 times the amount of the index. The margin requirement is $3,000. a. When you make the contract, how much must you put up? Round your answer to the nearest dollar. $ b. What is the value of the contract based on the index? Round your answer to the nearest dollar. c. If the value of the index rises 1 percent to 59.388, what is the profit on the investment? Round your answer to the nearest cent. $ What is the percentage earned on the funds you put up? Round your answer to one decimal place. % d. If the value of the index declines 1 percent to 58.212, what percentage of your funds will you lose? Round your answer to one decimal place. Enter your answer as a positive value. e. What is the percentage you earn (or lose) if the index falls to 53.8? Round your answer to one decimal place. Enter your answer as a positive value. The percentage -Select- is %. e. The percentage : profit/ loss
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