An investor sold six contracts of June/2018 corn. The price per bushel was $1.62, and each contract
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Question:
An investor sold six contracts of June/2018 corn. The price per bushel was $1.62, and each contract was for 5000 bushels. The initial margin deposit is $3000 per contract with the maintenance margin at $2250.
The contract is sell contract, meaning it will gain if the price falls and lose if price increases.
The price per bushel is $1.62, so for 5000 bushels it will be 5000×1.64 = $8100 and for 6 contracts it will be 8100 × 6 = $48600
- How much did the investor have to deposit on the investment?
The investor had to deposit ($3000 ×6)= $18000 on the investment since there are 6 contracts.
- The prices of the futures on the four days following the short sales were 1.58, 1.60, 1.66, and 1.70. Calculate the current balance on each of the next four days.
- If the investor closed out her position at the end of the fourth day, what was her final gain or loss over the four days in dollars and as a percentage of investment?
- If the investor kept her position, and the futures price on the fifth day was 1.80, would the investor face a margin call? If yes, how much would she need to put up?
Related Book For
Statistics for Business and Economics
ISBN: 978-0132930192
8th edition
Authors: Paul Newbold, William Carlson, Betty Thorne
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