Question
Ques 2: (3 marks) James is an active trader in forex market. On Tuesday morning he took he took a Short (Sell) position in a
Ques 2: (3 marks) James is an active trader in forex market. On Tuesday morning he took he took a Short (Sell) position in a CAD futures contract in SIMEX for CAD 125, 000 that matures on Thursday evening. The agreed rate is USD 0.8109/CAD. He expects that CAD will depreciate against USD in future. Tuesdays settlement price in SIMEX is USD 0.8028 =1CAD . At the close of trading on Wednesday, the futures price rises to USD 0.8211/CAD. At the close of trading on Thursday, the (Ft) price falls to USD 0.8101 /CAD and the contract matures. James had a balance of CAD 3,600 in his performance bond account on Tuesday morning. Requirement: a. Show the details of daily marking to market of the currency future contract ( 2 Marks) b. Calculate the net gain/loss ( 0.5 mark) c. How much is the performance bond account balance after the settlement in Thursday (0.5 mark)
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
Fundamental Accounting Principles
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
20th Edition
1259157148, 78110874, 9780077616212, 978-1259157141, 77616219, 978-0078110870
