Required: For mathematical symbols, enter = for equal, > for greater than, < for less than, + for plus, - for minus, / for division, * for multiplication, ^ for exponent power (e.g., 2^2=8), e^ for exponential function, sq for square root function, ( ) for the bracket.

Show your work step by step. For the calculation question, you do not have to copy the formula, however, you must show how you substitute the numbers into the formula. For example, to calculate future value, an appropriate answer is: Face value = 100*e^(0.1*1) = 110.52. An answer of 110.52 without showing the working process will be penalized. Keep 4 decimal points.

Tim owns a gold mine in Sovereign Hill and sells gold to a jewellery factory. On 1 May, Tim shorts two of the 1 June gold futures contracts at the price of $1740 per ounce. Each contract covers 10 ounces of gold. At the end of the first day, the closing futures price is $1730 per ounce. The future prices of the following days are provided in the table.

(a) Tims broker requires him to deposit 20% of the total contract value as the initial margin. The maintenance margin is 60% of the initial margin. How much are the initial margin and the maintenance margin? (2 marks)

(b) Tim feels the margin requirements are too high and finds another broker who requires him to deposit $3480 as the initial margin. The maintenance margin is $2088. Assume Tim does not withdraw any excess from his margin account between 1 and 10 May. Fill in the information (i.e., daily gain/loss ($), cumulative gain/loss ($), margin balance before margin call/withdraw ($), and margin call/withdraw ($)) in Rows 1-3 of the following table. (4 marks)

Row	Day	Trade Price ($)	Settle Price ($)	Daily Gain/Loss ($)	Cumulative Gain/Loss ($)	Margin Balance Before Margin Call/Withdraw ($)	Margin Call/Withdraw ($)
0	1 May	1740				3480
1	1 May		1730
2	2 May		1810
3	3 May		1795
4	4-9 May
5	10 May		1690	200		5880

(c) What is the settlement price on 9 May? (1 mark)

(d) What is the cumulative gain/loss if Tim closes his position on 10 May? (1 mark)

(e) List two factors that brokers need to consider when setting up the margin requirements for a particular investor. Explain how these factors affect margin requirements. (2 marks)