You purchase a 5,000-bushel contract for corn at $1.90 per bushel ($9,500 total). The initial margin requirement is 7 percent. The price goes up to $1.98 in one month. What is your percentage profit and the annualized gain?
Answer to relevant QuestionsMaxwell Securities buys a $100,000 par value, September 2010 Treasury bond contract at the quoted settle price in Table 15–8 on page 404. a. What is the dollar value of the contract? Use the settle price in your ...Farmer Tom Hedges anticipates taking 100,000 bushels of oats to the market in three months. The current cash price for oats is $2.15. He can sell a three-month futures contract for oats at $2.20. He decides to sell ten ...Why are stock index futures and options sometimes referred to as derivative products? Why do some investors believe derivative products make the markets more volatile? Using data from Table 16–5 on page 426, assume you purchase a December 1100 (strike price) S&P 500 put option. Compute your total dollar profit or loss if the index has the following values at expiration: a. 1260 b. ...Northern States Life Insurance Company has a $14 million stock portfolio. The company is very aggressive and the portfolio has a weighted beta of 1.30. a. Assume they use S&P 500 Index futures contracts to hedge the ...
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