Question
The margin requirement on the S&P 500 futures contract is 8%, and the stock index is currently 1,100. Each contract has a multiplier of $250.
The margin requirement on the S&P 500 futures contract is 8%, and the stock index is currently 1,100. Each contract has a multiplier of $250.
Note: The value of a futures contract on an index is the multiplier times the stock index.
a. How much margin must be put up for each contract sold?
Margin: ____
b. If the futures price falls by 2% to 1,078, what will happen to the margin account of an investor who holds one contract? (Input the amount as a positive value.)
Margin account _____.by ___
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 ____%
c-2. What would be the current cash balance in the margin account?
cash balance: ____
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