Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

This morning ( Day 0 ) you take a short position in a pound futures contract that matures in 3 days ( Day 3 )

This morning (Day 0) you take a short position in a pound futures contract that matures in 3 days (Day 3). The future price is $1.9750 today. The contract size is 62,500 and its initial performance bond and maintenance bond are $2,430 and $1,830, respectively.
a. Assuming that the daily settlement prices are indicated below, how would the daily change in settlement future prices affect your account? Show the daily gain/loss and account balance.
\table[[Day,Settlement,Gain/Loss,Account Balance],[0,1.9750,,],[1,1.9700,,],[2,1.9815,,],[3,1.9907,,],[,Total,,]]
b. During this period, did you receive a margin call? If you did, on what day?
c. At the end of Day 3, how much in total did you make/lose on this futures contract?
image text in transcribed

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

The Pillars Of Finance The Misalignment Of Finance Theory And Investment Practice

Authors: G. Fraser-Sampson

2014th Edition

1137264055, 978-1137264053

More Books

Students also viewed these Finance questions

Question

What will you do or say to Anthony about this issue?

Answered: 1 week ago