Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Refer to the Mini-S&P contract in Figure 22.1. Assume the closing price for this day. a. If the margin requirement is 26% of the futures

image text in transcribed

Refer to the Mini-S&P contract in Figure 22.1. Assume the closing price for this day. a. If the margin requirement is 26% of the futures price times the contract multiplier of $50, how much must you deposit with your broker to trade the September maturity contract? (Round your answer to 2 decimal places.) Answer is complete and correct. Required margin $ 27,075.10 deposit b. If the September futures price were to increase to 2,088.70, what percentage return would you earn on your net investment if you entered the long side of the contract at the price shown in the figure? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete but not entirely correct. Percentage return on net 7.39 % investment c. If the September futures price falls by 1%, what is your percentage return? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.) Percentage return on net investment %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Understanding financial statements

Authors: Lyn M. Fraser, Aileen Ormiston

9th Edition

136086241, 978-0136086246

More Books

Students also viewed these Finance questions