Mr. Smith enters into the long position in 5 S&P 500 futures contracts. His brokerage account requires
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Question:
Mr. Smith enters into the long position in 5 S&P 500 futures contracts. His
brokerage account requires an initial margin balance equal to 15% of the notional
amount and a maintenance margin equal to 80% of the initial margin balance. The
contracts will be marked to market on a weekly basis. The margin balance will earn
interest at a rate of 8.8%.
As of today, the S&P 500 futures price is 3,038.
a. One week from today, the S&P 500 futures price is 3,060. Determine Smith's
margin balance at the end of week 1.
Related Book For
Investments Analysis And Management
ISBN: 9781118975589
13th Edition
Authors: Charles P. Jones, Gerald R. Jensen
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