Question: Explain what a margin call is and when it occurs on a futures contract.

Explain what a margin call is and when it occurs on a futures contract.

Step by Step Solution

★★★★★

3.48 Rating (164 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

Futures traders must first open a margin account with their broker And before opening a futures posi... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

646-B-B-F-M (2732).docx

120 KBs Word File

Students Have Also Explored These Related Banking Questions!

Q:

1. Which of the following statements is false? a. A spot price is a price today for immediate delivery. b. If a Canadian firm has to pay U.S. dollars in the future, it worries about the potential...

Q:

When a known future cash outflow in a foreign currency is hedged by a company using a forward contract, there is no foreign exchange risk. When it is hedged using futures contracts, the daily...

Q:

You have just been hired by Jamestown Financial Services (JFS) as an investment adviser. Your boss, Susan Canton, must write a report for an important client, so she has decided to give you...

Q:

1. 2. 3. 4. A. In February, Dave Parsons purchased a June futures contract on the NASDAQ 100 Index. He decides to close out his position in April. Describe how he would do 50. B. Peggy Smith is a...

Q:

1. 2. 3. 4. A. In February, Dave Parsons purchased a June futures contract on the NASDAQ 100 Index. He decides to close out his position in April. Describe how he would do so. B. Peggy Smith is a...

Q:

1. 2. 3. 4. A. In February, Dave Parsons purchased a June futures contract on the NASDAQ 100 Index. He decides to close out his position in April. Describe how he would do 50. B. Peggy Smith is a...

Q:

1. Suppose that you enter into a long futures contract to buy 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...

Q:

a. The maturity of a futures contract on a stock market index is 4 months. The multiplier for the futures contract $250. The current level of the index is 32,000 . The risk-free rate is 0.6% per...

Q:

a. The maturity of a futures contract on a stock market index is 4 months. The multiplier for the futures contract $250. The current level of the index is 32,000 . The risk-free rate is 0.6% per...

Q:

a. The maturity of a futures contract on a stock market index is 4 months. The multiplier for the futures contract $250. The current level of the index is 32,000 . The risk-free rate is 0.6% per...

Q:

Why might the intertemporal consumption choices of credit-rationed households be inefficient?

Q:

Although we have yet to find the precise biological mechanisms of variation in gender identity and sexual orientation, briefly describe why the influence of prenatal sex hormones will likely prove to...

Q:

The presence of taxes has what effect on the multiplier? They a. increase it. b. decrease it. c. destabilize it. d. negate it. e. have no effect on it.

Q:

How has operations management changed since its early days as scientific management?

Q:

Plot since 1999, without recession bars, the real exchange rate between U.S. goods and euro-area goods according to equation (2) in the text. Use the consumer price index (divided by 1.95 to set a...

Q:

Write in algebraic form a calculation of U.K pounds per euro that uses U.S. dollars per U.K pound (FRED code: EXUSUK) and U.S. dollars per euro (FRED code: EXUSEU). Then plot since 1999 the exchange...

Q:

Examine an episode of large-scale interventions by the Bank of Japans (BOJ) in the yen-dollar foreign exchange market. Plot between January 2003 and January 2005 a measure of BoJ intervention (FRED...

Q:

13. [I9.61 Points] DEVORESTAT9 7.2.017. ASK YOUR TEACHER A sample of ultimate tensile strength observations (ksi) was taken. Use the accompanying descriptive statistics output from Minitab to...

Q:

To convert an income statement into a common-size income statement, we restate all the numbers as percentages of total assets cost of goods sold net income total revenues

Q:

Intro Roller Inc. has just paid an annual dividend of $0.62. Analysts expect dividends to grow by 7% per year for the next 5 years, and then by 2% per year thereafter. The company has a required...