Use the information below to answer the questions that follow:

$$ British Pound Futures contract size is $62,500$ pounds

$$ Let June futures price$=$$$1\mathrm{.}21/$

$$ Suppose buy $10$ June British Pound contracts on April $6$

$$ Initial margin $($in $$)$ is $4\%$ of value of position.

a$.$ What is the total value of your position in $ and the initial margin in $$?$

b$.$ Suppose the next trading day $($April $7),$ the June futures price falls to $$1\mathrm{.}20/.$ What is the

value of your total position in $ now? What is the profit$/$loss in $$?$ What is the margin

account equal to$?$

c$.($Do not use your answer to part b$).$ Suppose the next trading day $($April $7),$ the June

futures price rises to $$1\mathrm{.}22/.$ What is the value of your total position in $ now? What is the

profit$/$loss in $$?$ What is the margin account equal to$?$

d$.($Do not use your answer to parts b and c$).$ Suppose the next trading day $($April $7),$ the

June futures price rises to $$1\mathrm{.}23/$ and you enter into a reversing short position in $10$ June

Pound Futures contracts. What is the value of your position at expiration?

e$.($Do not use your answer to parts b$,$ c$,$ and d$).$ Draw a line to show the relative profit$/$loss

from holding a futures contract to buy British pounds at F$($$$/)=1\mathrm{.}21,$ compared to selling

British pounds at the spot rate $2$ months from now. On the graph note the profit$/$loss $($$$/)$

if the spot rate in $2$ months is equal to the futures price F$($$$/)=1\mathrm{.}21,$ the profit$/$loss $($$$/)$ if

the spot rate in $2$ months is equal to $$1\mathrm{.}22/,$ and the profit$/$loss $($$$/)$ if the spot rate in $2$

months is equal to $$1\mathrm{.}20/$