Question: Why is there substantial leverage in commodity investments
Why is there substantial leverage in commodity investments?
Answer to relevant QuestionsWhat group has primary regulatory responsibility for the activities of the commodity exchanges? The treasurer of the Larson Corporation is going to bring an $8 million issue to the market in 120 days. It will be a 25-year issue. The interest rate environment is highly volatile, and even though long-term interest rates ...If contracts are written on a 5,000-bushel basis requiring $3,000 of margin and you control 12 contracts, how much would the price per bushel have to change to generate enough profit to purchase an additional contract? How does the beta of a portfolio influence the number of contracts that must be used in the hedging process? Return to problem 1 and assume that margin must be maintained at a minimum level of $22,500. If the S&P Index futures contract goes from its initial value down to $1,051.80, will there be a call for more margin?
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