Question
The margin requirement on the S&P 500 futures contract is 16%, and the stock index is currently 2,100. Each contract has a multiplier of $50.
The margin requirement on the S&P 500 futures contract is 16%, and the stock index is currently 2,100. Each contract has a multiplier of $50. a. How much margin must be put up for each contract sold? b. If the futures price falls by 1% to 2,079, what will happen to the margin account of an investor who holds one contract? (Input the amount as a positive value.) 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.) c-2. What would be the current cash balance in the margin account?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started