Question: Please fill in and write the related equations for the TWO answers. Suppose an investor has a $1 million tong position in T-bond futures. The
Please fill in and write the related equations for the TWO answers. Suppose an investor has a $1 million tong position in T-bond futures. The investor's broker requires a maintenance margin of 3.5% percent, or $35,000 ($1m 0.035), which is the amount currently in the investor's account. Suppose also that the value of the futures contracts drops by $50,000 to $950,000. The investor's broker will make a margin call to the investor requiring him to immediately send a check for at his broker for the $950,000 T-bond futures position If the next day the futures contract drops in value by another $40,000 to $910,000, the investor's broker will further make a margin call to the investor requiring him to immediately send a check for at his broker for the $910,000 T-bond futures position
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
