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Tori Reynolds has been an avid stock market investor for years. She manages her portfolio fairly aggressively and likes to short - sell whenever the
Tori Reynolds has been an avid stock market investor for years. She manages her portfolio fairly aggressively and likes to shortsell whenever the
opportunity presents itself. Recently, she has become fascinated with stockindex futures, especially the idea of being able to play the market as a
whole. Tori thinks the market is headed down, and she decides to short sell some S&P stockindex futures. Assume she shorts contracts at
and has to make a margin deposit of $ for each contract. How much profit will she make, and what will her return on invested
capital be if the market does indeed drop so that the CME contracts are trading at by the time they expire? The multiple on one S&P
Index future contract is $
If the market does indeed drop so that the CME contracts are trading at by the time they exire, her profit will be $
Round to the
nearest cent.
Her return on invested capital will be
Round to two decimal places.
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