Help with Day 3 please

AutoSave OFF DA S U w margins_example-2 Q Search in Document Home Insert Draw Design Layout References Mailings Review View Share Comments Lo Times New Times New... 12A A Aa AO E B I Uvab X, X? Ave A AL E Cv Bv AaBbCcDdE AaBbCcDdE Normal No Spacing E AaBbCcDc AaBb CcDdEt AaBb Heading 1 Heading 2 Paste AaBb CcDdEt AaBbCcDdEt AaBbCcDdE Subtitle Subtle Emph... Emphasis Title Styles Pane Setup You are a manager of a grain elevator. You buy 10,000 bushels of corn from a local farmer. To hedge the price, you turn around and sell 2 contracts of December corn futures at $6/bushel (what turns out to be the settlement price for the day). Each contract is for 5,000 bushels, so you have purchased 10,000 bushels worth of futures. The initial margin for one contract is $2,700. The maintenance margin level for one contract is $2,000 per contract. Day 1 Corn prices decline 10 cents/bushel. [i.e. the settlement price for the day is 10 cents lower than yesterday's settlement price] a. What is the current price of corn futures? $5.90 b. What is the notional value of your position now? 5.90*10000 = $59,000 c. You've sold 2 futures contracts. If you were to buy your futures contracts back now, how much would you have made? =($6-$5.9*10,000=0.10*10,000= $1000 d. How much is now in your margin account? $5,400 +$1,000 = $6,400 Day 2 Corn futures prices go up 3 cents/bushel. a. What is the current price for corn futures? = 5.90 +.03= $5.93 b. If you bought back the futures now, what would you have made?=(6-5.93)*10000= $700 C. What is your margin account now? This is your equity. = 2700*2+700 = $6100 d. How much did your margin account change from Day 1? =6100-6400 = -$300 Page 1 of 2 380 words English (United States) Focus E. - - + 160% AutoSave OFF DA S U w margins_example-2 Q Search in Document Home Insert Draw Design Layout References Mailings Review View Share Comments Lo Times New AL Times New... 12A A Aa AO E BI U ab X, X? APA AaBbCcDdE Normal E AaBbCcDdE AaBbCcDc AaBbCcDdEt AaBb No Spacing Heading 1 Heading 2 Title AaBb CcDdee Subtitle AaBbCcDdEt AaBbCcDdEx Subtle Emph... Emphasis Paste Styles Pane Corn prices decline 10 cents/bushel. [i.e. the settlement price for the day is 10 cents lower than yesterday's settlement price] a. What is the current price of corn futures? $5.90 b. What is the notional value of your position now? 5.90*10000 = $59,000 c. You've sold 2 futures contracts. If you were to buy your futures contracts back now, how much would you have made? = ($6-$5.9*10,000=0.10*10,000= $1000 d. How much is now in your margin account? $5,400 +$1,000 = $6,400 Day 2 Corn futures prices go up 3 cents/bushel. a. What is the current price for corn futures? = 5.90 +.03= $5.93 b. If you bought back the futures now, what would you have made?=(6-5.93)*10000= $700 c. What is your margin account now? This is your equity. = 2700*2+700 = $6100 d. How much did your margin account change from Day 1? =6100-6400 = -$300 Day 3 Corn futures prices go up by 40 cents/bushel. a. What is current price? b. How much would you have made/lost if you bought back 2 corn futures at this price? c. How much is in your margin account now (i.e. what is your equity)? d. Compare this with the maintenance margin required to have 2 open contracts. What will the clearinghouse now require? Page 1 of 2 380 words x English (United States) Focus E - + 160%