Question: Problem 14-11 Margin Call (LO2, CFA2) Suppose the initial margin on heating oil futures is $12,900, the maintenance margin is $11,000 per contract, and you

Problem 14-11 Margin Call (LO2, CFA2) Suppose the initial margin on

Problem 14-11 Margin Call (LO2, CFA2) Suppose the initial margin on heating oil futures is $12,900, the maintenance margin is $11,000 per contract, and you establish a long position of 12 contracts today, where each contract represents 42,000 gallons. Tomorrow, the contract settles down $0.05 from the previous day's price. What is the maximum price decline on the contract that you can sustain without getting a margin call? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 3 decimal places.) Margin call cents per gallon

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!

11. Margin Call (LO2, CFA2) Suppose the initial margin on heating oil futures is $8,400, the maintenance margin is $7,200 per contract, and you establish a long position of 10 contracts today, where...

Margin Call (LO2, CFA2)Suppose the initial margin on heating oil futures is $8,400, the maintenance margin is $7,200 per contract, and you establish a long position of 10 contracts today, where each...

11. Margin Call (LO2, CFA3) Suppose the initial margin on heating oil futures is $8,400, the maintenance margin is $7,200 per contract, and you establish a long position of 10 contracts today, where...

Ch. 14 Futures A Saved 4 Suppose the initial margin on heating oil futures is $12,500, the maintenance margin is $11,000 per contract, and you establish a long position of 15 contracts today, where...

Suppose the initial margin on heating oil futures is $14,300, the maintenance margin is $10,000 per contract, and you establish a long position of 16 contracts today, where each contract represents...

Suppose the initial margin on heating oil futures is $ 1 2 , 9 0 0 , the maintenance margin is $ 1 1 , 0 0 0 per contract, and you establish a long position of 1 2 contracts today, where each...

Suppose the initial margin on heating oil futures is $12,900, the maintenance margin is $11,000 per contract, and you establish a long position of 12 contracts today, where each contract represents...

Suppose the initial margin on heating oil futures is $14,000, the maintenance margin is $12,000 per contract, and you establish a long position of 12 contracts today, where each contract represents...

Suppose the initial margin on heating oil futures is $ 1 4 , 0 0 0 , the maintenance margin is $ 1 2 , 0 0 0 per contract, and you establish a long position of 1 2 contracts today, where each...

Show ALL work and explanations in support of your answers. Suppose the initial margin on heating oil futures is $ 9 , 5 0 0 , the maintenance margin is $ 8 , 2 0 0 per contract, and you establish,...

Consider the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Explain the changes brought upon by this act to the hedge fund industry. Do you believe that the Act went far enough?...

Assume that you go to work for one of the large accounting firms upon your graduation from college and that for your first assignment, you are asked to review the deferred income tax asset account to...

A firm has sceond quarter dales of 1 5 million and costs of 1 2 million. It records taxes at a 3 5 % rate. It has 1 2 0 0 0 0 0 shares outstanding. The firms earnings per share is closet to

Draw a class diagram and its relationship based on the following statements. You can use any UML tool/software to represent your class diagram. Do NOT copy and paste your diagram, use the attachment...