Question: How does the concept of margin on a commodities contract differ from that of margin on a stock purchase?

How does the concept of margin on a commodities contract differ from that of margin on a stock purchase?

Step by Step Solution

★★★★★

3.35 Rating (167 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

Margin requirements on commodities contracts 210 percent are much lowe... 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

538-B-A-I (6844).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

Q:

Indicate some factors that might influence the price of wheat in the commodities market.

Q:

An investor purchases a 25,000-pound contract for copper at $2.10 per pound with an initial margin requirement of 6 percent. The price goes down to $2.06 after a year. What are the dollar and...

Q:

You purchase a futures contract in euros for $170,000. The trading unit is 125,000 euros. a. What is the ratio of cents to euros in this contract? (Divide the dollar contract size by the size of the...

Q:

1 What are the main components of personal financial planning? Solve What is the purpose of a financial plan? Solve Identify some common actions taken to achieve financial goals. How does a job...

Q:

(Questions from Lecture and Article) - Discussion Board Activity I need to read the following Lecture Note and the ?Wall Street Journal? articles that I uploaded, and writeanswers for theDiscussion...

Q:

Anyone can help me with requirement 3? Effect of assumed sales growth on vendor allowances. Tesco's Financial Reporting of Vendor Allowances1 The Company2 Tesco PLC (hereafter, Tesco, or the Company)...

Q:

what is your overall evaluation of PepsiCo?s business portfolio in 2014? Does the portfolio provide the company?s shareholders with an opportunity for above-average market returns? 5 PEPSICO PepsiCo...

Q:

more information is in attachment my Question is: Timing of recognition of sales allowance and journal entries Continue with the data provided in requirement 1. In addition, assume the following:...

Q:

more information is in attachment my Question is: Timing of recognition of sales allowance and journal entries Continue with the data provided in requirement 1. In addition, assume the following:...

Q:

Multiple Choice Questions 1. The maintenance margin for a futures contract refers to: a. The level to which a margin deposit must be returned after a margin call has been made b. The level to which a...

Q:

Are the pressures in the tables absolute or gauge pressures?

Q:

Resistance Spot-Welding operation is used to weld two metal sheets 4 mm thickness of each and 11 J/mm unit melting energy. The weld nugget is formed with 6 mm in diameter and 5.0 mm thick to provide...

Q:

Given that y = 3x+3sqr a + b 2 , (i) find (a) the value of y when a 13, b-15 and x = 3.8, (b) the value of a when b = 13, x=8.5 and y = 35, (c) the values of b when a -23, x-15.6 and y = 56. (ii)...

Q:

3-23. Suppose you are an executive for Forum Energy PLC, which was granted exploration rights in the Spratlys by the Philippines. What political risks do you face? What can you do to lessen these...

Q:

Refer to the Smith Valley Snow Park Lodge expansion project in S21-2. Requirement 1. Compute the payback period for the expansion project.

Q:

Refer to the Smith Valley Snow Park Lodge expansion project in S21-2. Requirement 1. Calculate the ROR.

Q:

Refer to the Smith Valley Snow Park Lodge expansion project in S21-2. Assume the expansion has zero residual value. Requirements 1. Will the payback period change? Explain your answer and recalculate...

Q:

Q.No.2 (5 marks) Three independent projects, each of which requires a RS 5 million investment are being considered for investment purpose by Sona Tea Company. The cost of capital and estimated...

Q:

Recently, a nurse commented that when a patient calls the medical advice line claiming to have the flu, the chance that he or she truly has the flu (and not just a nasty cold) is only about 4%. Of...

Q:

A forward contract with a settlement date at time T is issued based on an underlying asset with a current market price of B. The annualised risk-free force of interest applying over the term of the...