Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The margin requirement on the S&P 500 futures contract is 10%, and the stock index is currently 2,000. Each contract has a multiplier of $50.

image text in transcribed

image text in transcribed

The margin requirement on the S&P 500 futures contract is 10%, and the stock index is currently 2,000. Each contract has a multiplier of $50. a. How much margin must be put up for each contract sold? Margin $ 10,000 b. If the futures price falls by 1% to 1,980, what will happen to the margin account of an investor who holds one contract? (Input the amount as a positive value.) Margin account decreases by $ 1,000 c-1. What will be the investor's percentage return based on the amount put up as margin? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Percentage return % -2. What would be the current cash balance in the margin account? Cash balance

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

Theory Of Constraints Handbook

Authors: James Cox, John Schleier

1st Edition

0071665544, 978-0071665544

More Books

Students also viewed these Finance questions