How does the concept of margin on a commodities contract differ from that of margin on a stock purchase?
Answer to relevant QuestionsIndicate some factors that might influence the price of wheat in the commodities market. An investor purchases a 25,000-pound contract for copper at $2.10 per pound with an initial margin requirement of 6 percent. The price goes down to $2.06 after a year. What are the dollar and percentage losses? You purchase a futures contract in euros for $170,000. The trading unit is 125,000 euros. a. What is the ratio of cents to euros in this contract? (Divide the dollar contract size by the size of the trading unit.) b. Assume ...Why might the overuse of portfolio insurance be dangerous to the market? Based on the information in Table 16–1on page 417, assume you buy a Nasdaq 100 December contract at the settle price. You hold the contract for one month and suffer a loss of $3,000. What is settle price after one month?
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