Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are short 2 soybean futures contracts (5,000 by each) at a price of $3.50 per bushel. Your initial margin is $3,500. a. If

You are short 2 soybean futures contracts (5,000 by each) at a price of $3.50 per bushel. Your initial margin

You are short 2 soybean futures contracts (5,000 by each) at a price of $3.50 per bushel. Your initial margin is $3,500. a. If you are a speculator, what do you want to happen to the price of beans between now and your expiration? b. If the price of the contract goes to $3.60, what is the new amount in your margin account, and the percent return on your position? c. Suppose instead, the price of the contract went to $3.35. What would be the value in your margin account and the percent return on your position? You are long 3 soybean futures contracts (5,000 by each) at a price of $4.10 per bushel. Your initial margin is $7,500. a. If you are a speculator, what do you want to happen to the price of beans between now and your expiration? b. If the price of the contract goes to $4.60, what is the new amount in your margin account, and the percent return on your position? c. Suppose instead, the price of the contract went to $3.95. What would be the value in your margin account and the percent return on your position?

Step by Step Solution

3.35 Rating (155 Votes )

There are 3 Steps involved in it

Step: 1

Lets analyze the scenarios based on your positions Scenario 1 Short 2 Soybean Futures Contracts at 3... 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_2

Step: 3

blur-text-image_3

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

Introduction To Corporate Finance

Authors: Laurence Booth, Sean Cleary

3rd Edition

978-1118300763, 1118300769

More Books

Students also viewed these Finance questions

Question

Draw a Feynman diagram for the reaction n + v p + .

Answered: 1 week ago

Question

List the basic questions related to corporate financing.

Answered: 1 week ago