Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You think bitcoin is a fad, and an overvalued one at that. You short thee bitcoin futures contracts, each of which has five bitcoins as

image text in transcribed
image text in transcribed

You think bitcoin is a fad, and an overvalued one at that. You short thee bitcoin futures contracts, each of which has five bitcoins as the underlying asset, at a price of $6,409. A month later the same contract sells for $6,033. What is your dollar profit and your return on invested capital if you had to make an initial margin deposit of $41,309? What was the initial margin deposit relative to the value of the contracts you sold short? Does that percentage seem higher than the margin requirements of other assets? In general, what characteristic of bitcoin might lead the futures exchange to require a high initial margin?

The profit on this transaction is $ (Round to the nearest dollar.)

The pront on tis transection in 9 (Round to the nearest delar? margin reeulements of other assets? in ceneral, what characteriste of baboin might lead the futares enchacge to teguire a high intial margin? The proft on this transaction is 5 (Rourd to the nearest doliar)

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 Routledge Handbook Of State Owned Enterprises

Authors: Luc Bernier, Massimo Florio, Philippe Bance

1st Edition

1138487694, 978-1138487697

More Books

Students also viewed these Finance questions

Question

1. Does your voice project confidence? Authority?

Answered: 1 week ago