1. What is the major difference in the obligation of one with a long position in...
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1. What is the major difference in the obligation of one with a long position in a futures (or forward) contract in comparison to an options contract? 2. Assume today's settlement price on a CME EUR futures contract is $1.3140/EUR. You have a short position in one contract. Your performance bond account currently has a balance of $1,700. The next three days' settlement prices are $1.3126, $1.3133, and $1.3049. Calculate the changes in the performance bond account from daily marking-to- market and the balance of the performance bond account after the third day. (The contract size of one EUR contract is €125,000). What if you have a long position in the future contract? 3. Suppose on June 1st, 2016, the September 2016 can Peso future contract has price of 0.05481 per MXN. You believe the spot price in September will be $0.06133 per MXN. What speculative position would you enter into to attempt to profit from your beliefs? Calculate your anticipated profits, assuming you take a position in three contracts. What is the size of your profit (loss) if the futures price is indeed an unbiased predictor of the future spot price and this price materializes? (Note: The contract size of one MXN contract is MXN500,000) 1. What is the major difference in the obligation of one with a long position in a futures (or forward) contract in comparison to an options contract? 2. Assume today's settlement price on a CME EUR futures contract is $1.3140/EUR. You have a short position in one contract. Your performance bond account currently has a balance of $1,700. The next three days' settlement prices are $1.3126, $1.3133, and $1.3049. Calculate the changes in the performance bond account from daily marking-to- market and the balance of the performance bond account after the third day. (The contract size of one EUR contract is €125,000). What if you have a long position in the future contract? 3. Suppose on June 1st, 2016, the September 2016 can Peso future contract has price of 0.05481 per MXN. You believe the spot price in September will be $0.06133 per MXN. What speculative position would you enter into to attempt to profit from your beliefs? Calculate your anticipated profits, assuming you take a position in three contracts. What is the size of your profit (loss) if the futures price is indeed an unbiased predictor of the future spot price and this price materializes? (Note: The contract size of one MXN contract is MXN500,000)
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1 The major difference in obligations between a long position in a futures or forward contract and an options contract is as follows Futures Contract ... View the full answer
Related Book For
International Financial Management
ISBN: 978-0078034657
6th Edition
Authors: Cheol S. Eun, Bruce G.Resnick
Posted Date:
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