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Homework 1 Finance 3506 Due 09/09/14 1.You have just entered into a long position of 15 contracts in the S&P 500 contracts (trades $250 times the index) at a price of 1700.25. The initial margin for the contact is $19,250 and the maintenance margin is $17,500. Your account at the time you entered into the position had equity of $300,000. At what level of price would you first get a margin call (assume the minimum movement in the S&P 500 futures price .25). If the future close at 1650.50 would you get a margin call and if so how much would the call be for? Initial Margin 15 * $19,250 = $288,750 Maintenance Margin 15 * $17,500 = $262,500 Loss per contract = ($300,000- $262,500)/15 = $2,500 Number of point = $2,500/$250/point = 10 points Therefore it would have to fall below 1,700.25 - 10 = 1,690.25 or 1,690 If price was at 1,650.50 Loss = (1700.25-1,650.5)*$250/point *15 contracts = $186,562.50 Equity = $300,000 - $186,562.50 = $113,437.50