Assume today’s settlement price on a Chicago Mercantile Exchange EUR (euro) futures contract is $.1575/MXN. You BUY a futures contract to hedge an exposure to MXN10,000,000 payable. Your initial margin account balance is $40,000. The next three days’ settlement prices are $.1579/MXN, $.1571/MXN, and $.1562/MXN. Calculate the changes in the margin account (and the new balances) from daily marking-to-market adjustments over the next three days. The contract size is 10,000,000 Mexican Pesos. DAY 0 MB = $

DAY 1 ∆ = MB = $

DAY 2 ∆ = MB = $

DAY 3 ∆ = MB = $

5. A U.S. firm expects receivables of €500,000 in three months. The U.S. firm purchases a put option on the euros. The strike price is $1.25/€ and the premium is $.03/€. What is the total dollar amount received from the euro receivable if the spot rate in three months is (Multiply any $/€ amount by €500,000)

Answer rating: 100% (QA)

To calculate the changes in the margin account balance and new balances for each of the three days i... View the full answer