Suppose the S&P 500 index futures price is currently 1200. You wish to purchase four futures contracts

Question:

Suppose the S&P 500 index futures price is currently 1200. You wish to purchase four futures contracts on margin.

a. What is the notional value of your position?

b. Assuming a 10% initial margin, what is the value of the initial margin? Discuss with calculation.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Derivatives Markets

ISBN: 9789332536746

3rd Edition

Authors: Robert McDonald

See More Books

Question Posted: Aug 12, 2015 02:33 AM

See More Questions

Suppose that a one-year futures price is currently 35. A one-year European call option and a one-year European put option on the futures with a strike price of 34 are both priced at 2 in the market....
You have located a home that you wish to purchase and wish to evaluate bank financing options in order to determine your budget. Youve been working with a few banks on potential mortgage terms and...
You wish to purchase a 20-year, $1,000 face value bond that makes semiannual interest payments of $40. If you require a 10% nominal yield to maturity, what price should you be willing to pay for the...
Let F = [F] lb. a) Determine the force Fp acting at roller D. b) Determine the force FE acting at pin E. F 4 ft B 600 lb. ft -3 ft C -3 ft OD -2 ft- E
In a recent study, volunteers who had 8 hours of sleep were three times more likely to answer questions correctly on a math test than were sleep-deprived participants. (a) Identify the sample used in...
Suppose the target range for the federal funds rate is 1.5 to 2.0 percent but that the equilibrium federal funds rate is currently 1.70 percent. Assume that the equilibrium federal funds rate falls...
Consider a fully developed flow of water in a smooth pipe of diameter $15 \mathrm{~cm}$ at a flow rate of $0.006 \mathrm{~m}^{3} / \mathrm{s}$. The pressure drop can be calculated by the Blasius...
Your friend, Diane Kiefner, teaches elementary school and operates her own wilderness kayaking tours in the summers. She thinks she has been doing fine financially, but has never really measured her...
Journalize the nine adjusting entries that the company made on December 3 1 , current year. TINKER CORPORATION TRIAL BALANCES DECEMBER 31, CURRENT YEAR Unadjusted Adjusted Debit Credit Debit Credit...
1. Do you think large-scale providers like Amazon, Microsoft and IBM can influence prices of cloud computing in the longer term? 2. What is your opinion on a long-term price of zero, as currently...
The S&R index spot price is 1100 and the continuously compounded risk-free rate is 5%. You observe a 9-month forward price of 1129.257. a. What dividend yield is implied by this forward price? b....
Suppose the S&P 500 index is currently 950 and the initial margin is 10%. You wish to enter into 10 S&P 500 futures contracts. a. What is the notional value of your position? What is the margin? b....
Map the recursive relationship shown in Figure 8.14 to a relational database and show some sample data.
In Problems 20-52: a. State the type; and $\mathbf{b}$. Answer the question. If $\$ 5,000$ is compounded annually at $5.5 \%$ for 12 years, what is the future value?
Advertisements say that a new type of superball will rebound to $9 / 10$ of its original height. If it is dropped from a height of $10 \mathrm{ft}$, how far, based on the advertisements, will the...
Find the amount of periodic payment necessary for each deposit to a sinking fund in Problems 35-46. Amount Needed 44. Frequency n A $35,000 quarterly Rate r 8% Time t 12 yr
Evaluate each expression in Problems 3-32. $\left(\begin{array}{l}50 \\ 48\end{array}ight)$
In how many ways can a full house of three aces and two kings be obtained?
The equation of a circle is given. Find the circumference of the circle. Write the circumference in terms of . (x + 2) + (y - 3) = 9
Anne is employed by Bradley Contracting Company. Bradley has a $1.3 million contract to build a small group of outbuildings in a national park. Anne alleges that Bradley Contracting has discriminated...
Using the parameters in Table 13.1, verify that equation (13.9) is zero. Purchased Written Call price 2.7804 2.7804 Delta Gamma Theta 0.5824-0.5824 0.0652 0.0652 -0.0173 0.0173 Market-maker...
Consider a put for which T = 0.5 and K = $45. Compute the Greeks and verify that equation (13.9) is zero. Market-maker profi-(--er, +g + r [A,S,-C(SJ] ) h
You own one 45-strike call with 180 days to expiration. Compute and graph the 1-day holding period profit if you delta-and gamma-hedge this position using a 40-strike call with 180 days to expiration.
1. A clothes dryer rates at 4000 W runs for 1.50 hours each day. it uses utility power at 240 V. how much current does the dryer use? 2. For the clothes dryer in the previous question, how much does...
A particle undergoing simple harmonic motion has a potential energy given by E/J=3(y/m) as it oscillates back and forth along the y-axis. When the y-coordinate of the particle is 0.75 m, what is the...
A 480-g iron pan is heated on a stove to a temperature of 130 C. The pan is then dropped into a partially-filled sink of water at 20 C. The final temperature reached by the sink and the pan is 40 C....

Suppose the S&P 500 index futures price is currently 1200. You wish to purchase four futures contracts

Question:

Step by Step Answer:

a The notional value of four contracts is 4 250 1200 1200000 beca...View the full answer

Derivatives Markets

Students also viewed these Corporate Finance questions