A silver producer plans to sell 50,000 ounces of silver in October 2021 (i.e., 3 months...

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A silver producer plans to sell 50,000 ounces of silver in October 2021 (i.e., 3 months from now). To hedge this transaction, it decided to enter into ten silver futures contracts today. The details of the contracts are as follows: Maturity of the contracts: November 2021 (i.e., 4 months from now) Contract size: 5,000 ounces Initial margin: $2,000/contract Maintenance margin: $1,800/contract Today's silver futures price: $17.40/ounce Today's silver spot price: $17.25/ounce Standard deviation of changes in futures prices: 0.35 Standard deviation of changes in spot prices: 0.31 Correlation coefficient between changes in futures prices and changes in spot prices: 0.90 (a) (2 points) The following table outlines the movements in silver spot price and futures price (of the November 2021 contract) over the next 4 days. Please complete the table by determining (a) the daily gain/loss from the marking-to-market procedure; (b) the amount remaining in the producer's margin account at the end of each day; (c) whether the producer will receive a margin call at the end of each day; and (d) if so, what the amount of the margin call will be. Remember that the margin account is for the total positions. Spot Price (S/oz.) Futures Day Price (S/oz.) Daily Gain/Loss Margin Account Balance ($) Margin Call 0 (today) 17.25 17.40 1 17.18 17.35 2 17.15 17.31 3 17.24 17.38 4 17.33 17.48 A silver producer plans to sell 50,000 ounces of silver in October 2021 (i.e., 3 months from now). To hedge this transaction, it decided to enter into ten silver futures contracts today. The details of the contracts are as follows: Maturity of the contracts: November 2021 (i.e., 4 months from now) Contract size: 5,000 ounces Initial margin: $2,000/contract Maintenance margin: $1,800/contract Today's silver futures price: $17.40/ounce Today's silver spot price: $17.25/ounce Standard deviation of changes in futures prices: 0.35 Standard deviation of changes in spot prices: 0.31 Correlation coefficient between changes in futures prices and changes in spot prices: 0.90 (a) (2 points) The following table outlines the movements in silver spot price and futures price (of the November 2021 contract) over the next 4 days. Please complete the table by determining (a) the daily gain/loss from the marking-to-market procedure; (b) the amount remaining in the producer's margin account at the end of each day; (c) whether the producer will receive a margin call at the end of each day; and (d) if so, what the amount of the margin call will be. Remember that the margin account is for the total positions. Spot Price (S/oz.) Futures Day Price (S/oz.) Daily Gain/Loss Margin Account Balance ($) Margin Call 0 (today) 17.25 17.40 1 17.18 17.35 2 17.15 17.31 3 17.24 17.38 4 17.33 17.48