Question 11 (3.33 points) Which of the following is true? Speculators who expect the euro will decline buy futures contracts on euros. The buyer of a put option is obligated to sell the underlying currency to the seller of the put option on the expiration date if the option can only be exercised on the expiration date. If you expect the peso to depreciate, it would be appropriate to buy a peso put option for speculative purposes. The writer (seller) of a call option is not obligated to sell the underlying currency to the buyer of the call option at the specified strike price (i.e., exercise price) if the option is exercised. Question 12 (3.33 points) On 4/2 at the end of the day, Dylan sold (took a short position in) 1 futures contract (one contract is agreement to buy or sell 100,000 Australian dollars) at a rate of $0.6480 per Australian dollar, contract expires on 6/21. Initial margin= $2,050 and maintenance margin is $1,800. On 4/3 and 4/4, the futures rate expiring on 6/21 is $0.6653 per Australian dollar, and $0.6580 per Australian dollar respectively. As per "Marked to Market" daily mechanism of currency futures contracts, what should be Dylan's margin account balance at the end of 4/3 (Assuming that Dylan will not withdraw money from his margin account)? On 4/3, Dylan would receive a margin call from the broker to deposit $1,730 to bring up his margin balance on 4/3 back to $2,050. On 4/3, Dylan would receive a margin call from the broker to deposit $1,480 to bring up his margin balance on 4/3 back to $1,800. On 4/3, Dylan's margin balance would be $3,780 due to the gain of $1,730 realized from the change in the futures rate. On 4/3, Dylan's margin balance would be $320 due to the loss of $1,730 realized from the change in the futures rate. Question 13 (3.33 points) Continued from the above Question, what would be Dylan's margin account balance at the end of 4/4 (Assuming that Dylan will not withdraw money from his margin account)? On 4/4, Dylan's margin balance would be $2,780 due to the gain of $730 realized from the change in the futures rate. On 4/4, Dylan's margin balance would be $3,050 due to gain of $1,000 realized from the change in the futures rate. On 4/4, Dylan's margin balance would be $1,050 due to the loss of $1,000 realized from the change in the futures rate. On 4/4, Dylan would receive another margin call to deposit $730 to bring up his margin balance on 4/4 back to $2,050. On 4/4, Dylan would receive another margin call to deposit $480 to bring up his margin balance on 4/4 back to $1,800. Question 11 (3.33 points) Which of the following is true? Speculators who expect the euro will decline buy futures contracts on euros. The buyer of a put option is obligated to sell the underlying currency to the seller of the put option on the expiration date if the option can only be exercised on the expiration date. If you expect the peso to depreciate, it would be appropriate to buy a peso put option for speculative purposes. The writer (seller) of a call option is not obligated to sell the underlying currency to the buyer of the call option at the specified strike price (i.e., exercise price) if the option is exercised. Question 12 (3.33 points) On 4/2 at the end of the day, Dylan sold (took a short position in) 1 futures contract (one contract is agreement to buy or sell 100,000 Australian dollars) at a rate of $0.6480 per Australian dollar, contract expires on 6/21. Initial margin= $2,050 and maintenance margin is $1,800. On 4/3 and 4/4, the futures rate expiring on 6/21 is $0.6653 per Australian dollar, and $0.6580 per Australian dollar respectively. As per "Marked to Market" daily mechanism of currency futures contracts, what should be Dylan's margin account balance at the end of 4/3 (Assuming that Dylan will not withdraw money from his margin account)? On 4/3, Dylan would receive a margin call from the broker to deposit $1,730 to bring up his margin balance on 4/3 back to $2,050. On 4/3, Dylan would receive a margin call from the broker to deposit $1,480 to bring up his margin balance on 4/3 back to $1,800. On 4/3, Dylan's margin balance would be $3,780 due to the gain of $1,730 realized from the change in the futures rate. On 4/3, Dylan's margin balance would be $320 due to the loss of $1,730 realized from the change in the futures rate. Question 13 (3.33 points) Continued from the above Question, what would be Dylan's margin account balance at the end of 4/4 (Assuming that Dylan will not withdraw money from his margin account)? On 4/4, Dylan's margin balance would be $2,780 due to the gain of $730 realized from the change in the futures rate. On 4/4, Dylan's margin balance would be $3,050 due to gain of $1,000 realized from the change in the futures rate. On 4/4, Dylan's margin balance would be $1,050 due to the loss of $1,000 realized from the change in the futures rate. On 4/4, Dylan would receive another margin call to deposit $730 to bring up his margin balance on 4/4 back to $2,050. On 4/4, Dylan would receive another margin call to deposit $480 to bring up his margin balance on 4/4 back to $1,800