Ethel and Egbert have decided to invest in the futures market. Both entered into 1,000 futures contracts, which required a $30,000 initial margin. The maintenance margin for each investor is $22,500. Ethel and Egbert disagree about the future so Ethel went long while Egbert went short. Estimate each investor’s daily profit (loss) and equity position (assuming no cash deposits orwithdrawals).
Answer to relevant QuestionsAn investor enters into a long position in 50,000 futures contracts that requires a $50,000 initial margin and has a maintenance margin that is 75 percent of this amount. The futures price associated with this contract is ...For Question 18, explain how the spreads are shared between the two parties, and describe the absolute advantage and comparative advantage in the swap.Suppose the spot exchange rate is C$1.4665 per €1, while the six-month forward rate is C$1.50 per euro. What will be the profit for an investor who assumes a €100,000 long position in the forward contract if the spot ...Briefly state all the factors that affect the value of a call option and a put option.Does put-call parity hold for the following? Risk-free rate = 5%, P0 = $13, C0 = $ 10, stock price (S) = $30, t = 4 years, strike price (X) = $33. If not, what is the put price according to put-call parity, assuming the ...
Post your question