• Question 17

	Today's settlement price on a Chicago Mercantile Exchange (CME) Australian dollar (AUD) futures contract is $0.6910/A$. Your margin account currently has a balance of $2,000. The next three days' settlement prices are $0.6905/A$, $0.6900/A$, and $0.6890/A$. A futures contract specifies A$100,000. If you have a short position in four futures contracts, the changes in the margin account from daily marking-to-market will result in the balance of the margin account after the third day to be: (Hint: margin account balance changes as much as the profit (loss) you make every day. Refer to Ch 05 Practice Problems: Currency Futures and Options)

• Question 18

	The current spot exchange rate is $1.110 = 1.00 and the three-month forward rate is $1.115 = 1.00. Consider two American call option contracts that expires in three months with a strike price of $1.100 = 1.00 and premium of $.007 per unit. An option contract specifies 125,000. Immediate exercise of this option will generate a profit of _____.