Suppose that you enter into a short futures contract to sell July silver for $17.20 per ounce.
Question:
Suppose that you enter into a short futures contract to sell July silver for $17.20 per ounce. The size of the contract is 5,000 ounces. The initial margin is $4,000, and the maintenance margin is $3,000. What change in the futures price will lead to a margin call? What happens if you do not meet the margin call?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 71% (7 reviews)
There will be a margin call when 1000 has been lost from th...View the full answer
Answered By
Joemar Canciller
I teach mathematics to students because I love to share what I have in this field.
I also want to see the students to love math and be fearless in this field.
I've been tutoring these past 2 years and I would like to continue what I've been doing.
5.00+
1+ Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Corporate Finance questions
-
Suppose that you enter into a six-month forward contract on a non-dividend-paying stock when the stock price is $30 and the risk-free interest rate (with continuous compounding) is 5% per annum. What...
-
A company enters into a short futures contract to sell 5,000 bushels of wheat for 250 cents per bushel. The initial margin is $3,000 and the maintenance margin is $2,000. What price change would lead...
-
A company enters into a short futures contract to sell 5,000 bushels of wheat for 250 cents per bushel. The initial margin is $3,000 and the maintenance margin is $2,000. What price change would lead...
-
The following given is the 911 call data. Call 1 2 3 4 5 6 7 8 9 10 11 12 13 14 0642 O HUB0: Time g 1:01 1:05 1:07 1:11 1:16 1:20 1:20 1:21 1:26 1:26 1:28 1:31 1:34 1:35 Call 15 16 17 DARREN342222 18...
-
Describe the series of steps that most firms take in setting dividend policy in practice. MINI CASE Southeastern Steel Company (SSC) was formed 5 years ago to exploit a new continuous-casting...
-
The current spot rate is USD 1.00 / EUR and the 6-month forward is USD 1.20 /EUR. You go long (you will purchase) EUR 1,000 forward. At maturity, the spot exchange rates is USD 1.10 / EUR. How much...
-
Accountants for Datsun, Inc., have assembled the following data for the year ended December 31, 2007: Requirement Prepare Datsun's statement of cash flows using the indirect method to report...
-
Russell Retail Group begins the year with inventory of $ 55,000 and ends the year with inventory of $ 45,000. During the year, the company has four purchases for the following amounts. Purchase on...
-
Discuss and explain why sampling permits us to make inferences about populations
-
Use the data in PNTSPRD.RAW for this exercise. (i) The variable favwin is a binary variable if the team favored by the Las Vegas point spread wins. A linear probability model to estimate the...
-
It is July 2017. A mining company has just discovered a small deposit of gold. It will take six months to construct the mine. The gold will then be extracted on a more or less continuous basis for...
-
What position is equivalent to a long forward contract to buy an asset at K on a certain date and a put option to sell it for K on that date?
-
Why do healthcare organizations often have a much wider range of customers than organizations in other industries?
-
Normally, jet engines push air out the back of the engine, resulting in forward thrust, but commercial aircraft often have thrust reversers that can change the direction of the ejected air, sending...
-
A falcon is hovering above the ground, then suddenly pulls in its wings and begins to fall toward the ground. Air resistance is not negligible. Identify the forces on the falcon.
-
A group of students is making model cars that will be propelled by model rocket engines. These engines provide a nearly constant thrust force. The cars are light-most of the weight comes from the...
-
In t-ball, young players use a bat to hit a stationary ball off a stand. The 140 g ball has about the same mass as a baseball, but it is larger and softer. In one hit, the ball leaves the bat at 12...
-
Suppose that, while in a squatting position, you stand on your hands, and then you pull up on your feet with a great deal of force. You are applying a large force to the bottoms of your feet, but no...
-
What are some specific jobs in which you would be comfortable having a high percentage of pay at risk? What are some jobs in which you would prefer having guaranteed pay? What is the difference...
-
Question 6.10 Current and deferred tax worksheets and tax entries From the hip Ltd?s statement of profit or loss for the year ended 30 June 2007 and extracts from its statements of financial position...
-
Suppose that there are no storage costs for crude oil and the interest rate for borrowing or lending is 5% per annum. How could you make money if the June and December futures contracts for a...
-
A company has derivatives transactions with Banks A, B, and C which are worth +$20 million, $15 million, and $25 million, respectively to the company. How much margin or collateral does the company...
-
A banks derivatives transactions with a counterparty are worth +$10 million to the bank and are cleared bilaterally. The counterparty has posted $10 million of cash collateral. What credit exposure...
-
At the end of the current year, Accounts Receivable has a balance of $880,000, Allowance for Doubtful Accounts has a credit balance of $8,000, and sales for the year total $3,960,000. Bad debt...
-
On January 1 of this year, Ikuta Company issued a bond with a face value of $120,000 and a coupon rate of 5 percent. The bond matures in 3 years and pays interest every December 31. When the bond was...
-
Discuss the impact of enzyme engineering and directed evolution in the development of enzymes with enhanced or novel catalytic activities for industrial or pharmaceutical applications .
Study smarter with the SolutionInn App