Question: A trader buys 200 shares of a stock on margin
A trader buys 200 shares of a stock on margin. The price of the stock is $20. The initial margin is 60% and the maintenance margin is 30%. How much money does the trader have to provide initially? For what share price is there a margin call?
Answer to relevant QuestionsIn Figure 18.3 where the CCP is used, suppose that an extra transaction between A and C which is worth 140 to A is cleared bilaterally. What effect does this have on the tables in Figure 18.3? Extend Example 20.3 to calculate CVA when default can happen in the middle of each month. Assume that the default probability during the first year is 0.001667 per month and the default probability during the second year is ...What difference does it make to the worst-case scenario in Example 22.1 if (a) the options are American rather than European and (b) the options are barrier options that are knocked out if the asset price reaches $65? Use ...Suppose that all options traders decide to switch from Black–Scholes to another model that makes different assumptions about the behavior of asset prices. What effect do you think this would have on (a) the pricing of ...Assume that in Business Snapshot 27.1, the change in the three-month Euribor rate in each quarter, is normally distributed with mean zero and a standard deviation equal to x basis points. Use Monte Carlo simulation (500 ...
Post your question