2. MARGIN REQUIREMENTS 1. On January 31, a company takes a short position in May futures...

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2. MARGIN REQUIREMENTS 1. On January 31, a company takes a short position in May futures on 5,400 oz of gold at $1,168.60/oz. The size of one contract is 100 oz. The initial margin is $12,870 per contract and the maintenance margin is $11,700 per contract. a. How much money should be deposited as the initial margin for the whole position? b. What is the smallest price change that would lead to a margin call? c. What should be the closing price of May gold futures on January 31, for the exchange to withdraw $56,430.00 from the margin account in the process of daily settlement? d. What should be the closing price of May gold futures on January 31, for the exchange to deposit $66,096.00 to the margin account in the process of daily settlement? e. What amount (if any) would be required to be deposited by the company to the margin account if the closing price of May gold futures on January 31 is $1,183.00/0z? 2. On January 31, a company takes a long position in July futures on 1,764,000 gal of gasoline at $1.3552/gal. The size of one contract is 42,000 gal. The initial margin is $6,237 per contract and the maintenance margin is $5,670 per contract. a. How much money should be deposited as the initial margin for the whole position? b. What is the smallest price change that would lead to a margin call? Hints: c. What should be the closing price of July gasoline futures on January 31, for the exchange to withdraw $48,510.00 from the margin account in the process of daily settlement? d. What should be the closing price of July gasoline futures on January 31, for the exchange to deposit $18,522.00 to the margin account in the process of daily settlement? e. What amount (if any) would be required to be deposited by the company to the margin account if the closing price of July gasoline futures on January 31 is $1.3398/gal? • Remember to multiply price per unit by the contract size and the number of contracts. Answers to part b. should be given as a change relative to the opening price of the position (i.e. "The price should decrease/increase by...") • Parts b., c., d., and e. should be considered independently from each other. Round your answers to three decimal places. 2. MARGIN REQUIREMENTS 1. On January 31, a company takes a short position in May futures on 5,400 oz of gold at $1,168.60/oz. The size of one contract is 100 oz. The initial margin is $12,870 per contract and the maintenance margin is $11,700 per contract. a. How much money should be deposited as the initial margin for the whole position? b. What is the smallest price change that would lead to a margin call? c. What should be the closing price of May gold futures on January 31, for the exchange to withdraw $56,430.00 from the margin account in the process of daily settlement? d. What should be the closing price of May gold futures on January 31, for the exchange to deposit $66,096.00 to the margin account in the process of daily settlement? e. What amount (if any) would be required to be deposited by the company to the margin account if the closing price of May gold futures on January 31 is $1,183.00/0z? 2. On January 31, a company takes a long position in July futures on 1,764,000 gal of gasoline at $1.3552/gal. The size of one contract is 42,000 gal. The initial margin is $6,237 per contract and the maintenance margin is $5,670 per contract. a. How much money should be deposited as the initial margin for the whole position? b. What is the smallest price change that would lead to a margin call? Hints: c. What should be the closing price of July gasoline futures on January 31, for the exchange to withdraw $48,510.00 from the margin account in the process of daily settlement? d. What should be the closing price of July gasoline futures on January 31, for the exchange to deposit $18,522.00 to the margin account in the process of daily settlement? e. What amount (if any) would be required to be deposited by the company to the margin account if the closing price of July gasoline futures on January 31 is $1.3398/gal? • Remember to multiply price per unit by the contract size and the number of contracts. Answers to part b. should be given as a change relative to the opening price of the position (i.e. "The price should decrease/increase by...") • Parts b., c., d., and e. should be considered independently from each other. Round your answers to three decimal places.

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Solutions for Margin Requirements 1 Gold a Initial Margin 54 contracts 5400 oz 100 ozcontract 12870c... View the full answer