Question: Explain why participants have to post margin when using futures contracts? Describe the relationship between the initial margin posted for long and short futures positions.

  1. Explain why participants have to post margin when using futures contracts? Describe the relationship between the initial margin posted for long and short futures positions. Explain how a clearinghouse works and why it is important in both options and futures markets.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock 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

Students Have Also Explored These Related Finance Questions!

Q:

hhelp Question: a) When a known cash outflow in a foreign currency is hedged by a company using a forward contract, there is no foreign exchange rate risk. When it is hedged using futures contracts,...

Q:

Attached is a file. See page 14. I need answer for part e). Please read instructions for rounding rules. UNIVERSITY OF MANITOBA Faculty of Management Department of Accounting and Finance Professors:...

Q:

Hi I need answers immediately. Attached is a file. I need the detailed solutions (no excel, can be typed or handwritten) to the long answer portions ONLY. Please read instructions for rounding rules....

Q:

HI! can you please answer the Long answer question #1, part h), on the attached file! Thank you very much UNIVERSITY OF MANITOBA Faculty of Management Department of Accounting and Finance Professors:...

Q:

I need verification if my answers are right see page 14 of sample final and attached picture. Did I do it right or is the hedging options column wrong? UNIVERSITY OF MANITOBA Faculty of Management...

Q:

Attached is a file. See page 14. I need answer for part d). Please read instructions for rounding rules. UNIVERSITY OF MANITOBA Faculty of Management Department of Accounting and Finance Professors:...

Q:

1. Explain why MGRM wanted to offer a price guarantee on purchase contracts for its customers? 2. Describe the position that MGRM had. Why did it want to hedge its position? 3. Describe the basic...

Q:

Hi, I am doing a project for derivatives class and I have some questions about a regression and Monte Carlo simulation that I need to come up with. So the goal is to hedge against CDS instruments by...

Q:

I need a step by step solutions for the 10 problems in the excel file. The correct answers are provided I only need the solutions steps. Subject is Finance (options valuation) On March 2, a Treasury...

Q:

Evaluate the potential gains and losses for forwards,future,call options,put options and swaps. Outline and describe the different risks that each type of derivative contract faces. Describe...

Q:

Find V o in the circuit in figure using Thevenin?s theorem. 1 2 mA 2 kn V. 2 kn 1 12 v(+

Q:

You are the manager of a firm that produces a product according to the cost function C(qi) = 100 + 50qi 4qi2 + qi3. Determine the short-run supply function if: a. You operate a perfectly competitive...

Q:

Accuracy and consistency of accounting - generated statements and data contained in them are keys to the success of credit ratings and bond valuation. Do you see any potential problems / conflicts of...

Q:

Add "Viggo Mortenslet cast = new Map ( ) ;en " to the cast as the key, with value "Aragorn".