Mr. Smith enters into the long position in 5 S&P 500 futures contracts. His 

brokerage account requires an initial margin balance equal to 15% of the notional 

amount and a maintenance margin equal to 80% of the initial margin balance. The 

contracts will be marked to market on a weekly basis. The margin balance will earn 

interest at a rate of 8.8%.

As of today, the S&P 500 futures price is 3,038. 

a.    One week from today, the S&P 500 futures price is 3,060. Determine Smith's 

margin balance at the end of week 1. 

Answer rating: 100% (QA)

Answer To determine Mr Smiths margin balance at the end of week 1 we need to calculate the initial m... View the full answer