The material handed in should be printed pages from a spreadsheet. (Do not submit the spreadsheet unless you set it up to print only the work you want graded.) The quiz length should be three pages: one page for 1) below, one page for 2) below, and this page attached to the back. 1) Work maintenance account example in Purcell and Koontz, Chapter 1, Table 1.1, page 7. Do not use the margin requirements in the table. Use $1,400 for the initial margin and $1,000 for the maintenance margin. Your spreadsheet should look like the Marking to Market Handout. But it is recommended that you add a column for the quantity traded. (A) Assume you trade three contracts. Assume you enter each trade at the market close. (B) Write a short summary on the spreadsheet page. Do not describe every step that you performed. Summarize what makes the calculations in this quiz different from the material in the text. (C) What are you assuming by jumping from July to September? (D) Please notice there is a problem in the book table. It is a typo. What is it? 2) Work the maintenance account on a second spreadsheet page where you trade two contracts. You buy the first contract, as before and in the table, on July 2. Assume you buy the second contract at the close on July 3. Then assume you sell one contract back at the close on July 17 and, as in the table, sell the remaining contract on Sep 21. Again, assume you get out of the trade at the market closing price. This assumption will impact the quantity so be careful and think. Complete your work on a single spreadsheet. The maintenance account dollars for all corn contracts are kept in a single account. In other words, dont split the contracts out separately in your spreadsheet. Use $1,400 per contract for the initial margin and $1,000 per contract for the maintenance margin. Also make the following assumptions. (A) Assume your broker makes you put up enough initial margin on the additional trades to cover the initial margin on all open contracts. (B) Assume you leave the money in your maintenance account after liquidating any of your long positions. You wont but (C) does it matter which contract you sell first? Offer proof and not just opinion.

Price TABLE 1.1 Balance ($ (S per bu.) Action Margin Action Date Accounting for Margins and Margin Calls for a Long Position in December Corn, 50,000-Bushel Contract Initial margin = S1.200 Maintenance margin = $800 Buv December corn S35 uy 2 futures $3,50. SI200 3. 16 1.000 Holiday July July 5 July 6 July 9 July 1 July July 12 July 13 July 16 July 1 $500 call 3.40 1.200 3.33 850 $600 call 3. 28 1.200 3.31 1.350 1,00 3.38 3.40 1.800 3. 2.150 3.56 2.600 3.66 3.100 July 18 July 19 July 3.-0 3.300 3.350 3.-1 3.*5 3.550 Sell December corn Sept 1 $3.90 futures&S3.90 S4.300 In this example, the trader has $25,000 in the Futures Account with a broker The trader wishes to trade one 5000 bushel soybean contract. The brokerage house has the following margins on soybean contracts. $3000/contract Initial Margin $2000/contract Maintenance Margin Maintenance Account Daily Price Daily Gain Change Action Settlement End-of-Day Balance Date Beginning of Day Balance Deposit Price or Loss 7/10 Sel 9.20 9.02 $3000 $3000 $3900 $2400 $3000 $4500 $5000 -0.18 +0.30 +0.18 -0.30 -0.10 +900 $3000 $3900 $2400 $3000 $4500 7/11 7/12 7/13 9.32 9.50 9.20 -1500 -900 +1500 +500 $1500 7/14 7/17 9.10 Buy Commission on the Roundturn is $75 Meanwhile, back in the Futures Account: Beginning Balance (Prior to trade) $25,000 -3,000 Initial Margin (7/10) Margin Call (7/13) From maintenance account after trade (7/17) -,500 +5,000 -75 $25.425 Commission (7/17) Ending Balance (After offsetting the position) closing price Date 7/2 $ 3.50 7/3 $ 3.46 7/4 7/5 $ 3.40 7/6 $ 3.33 7/9 $ 3.28 7/10 $ 3.31 7/11 $ 3.38 7/12 $ 3.40 7/13 $ 3.47 7/16 $ 3.56 7/17 $ 3.66 7/18 $ 3.70 7/19 $ 3.71 7/20 $ 3.75 Price TABLE 1.1 Balance ($ (S per bu.) Action Margin Action Date Accounting for Margins and Margin Calls for a Long Position in December Corn, 50,000-Bushel Contract Initial margin = S1.200 Maintenance margin = $800 Buv December corn S35 uy 2 futures $3,50. SI200 3. 16 1.000 Holiday July July 5 July 6 July 9 July 1 July July 12 July 13 July 16 July 1 $500 call 3.40 1.200 3.33 850 $600 call 3. 28 1.200 3.31 1.350 1,00 3.38 3.40 1.800 3. 2.150 3.56 2.600 3.66 3.100 July 18 July 19 July 3.-0 3.300 3.350 3.-1 3.*5 3.550 Sell December corn Sept 1 $3.90 futures&S3.90 S4.300 In this example, the trader has $25,000 in the Futures Account with a broker The trader wishes to trade one 5000 bushel soybean contract. The brokerage house has the following margins on soybean contracts. $3000/contract Initial Margin $2000/contract Maintenance Margin Maintenance Account Daily Price Daily Gain Change Action Settlement End-of-Day Balance Date Beginning of Day Balance Deposit Price or Loss 7/10 Sel 9.20 9.02 $3000 $3000 $3900 $2400 $3000 $4500 $5000 -0.18 +0.30 +0.18 -0.30 -0.10 +900 $3000 $3900 $2400 $3000 $4500 7/11 7/12 7/13 9.32 9.50 9.20 -1500 -900 +1500 +500 $1500 7/14 7/17 9.10 Buy Commission on the Roundturn is $75 Meanwhile, back in the Futures Account: Beginning Balance (Prior to trade) $25,000 -3,000 Initial Margin (7/10) Margin Call (7/13) From maintenance account after trade (7/17) -,500 +5,000 -75 $25.425 Commission (7/17) Ending Balance (After offsetting the position) closing price Date 7/2 $ 3.50 7/3 $ 3.46 7/4 7/5 $ 3.40 7/6 $ 3.33 7/9 $ 3.28 7/10 $ 3.31 7/11 $ 3.38 7/12 $ 3.40 7/13 $ 3.47 7/16 $ 3.56 7/17 $ 3.66 7/18 $ 3.70 7/19 $ 3.71 7/20 $ 3.75