When opening a new position on futures contract, a broker requires initial margin of 15% (of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
When opening a new position on futures contract, a broker requires initial margin of 15% (of the initial contract size). The broker requires an investor to replenish his margin account when the balance falls below the maintenance margin of 10% (of initial contract size). What is the margin account balance of short trader at t=3? Futures prices each day are given below. They opened 10 contracts, and contract size is 100 bushels. t0 (initial trade) t1 t2 t3 Futures Price (per bushel) $0.4 $0.45 $0.35 $0.36 Long Position Margin Short Position Margin When opening a new position on futures contract, a broker requires initial margin of 15% (of the initial contract size). The broker requires an investor to replenish his margin account when the balance falls below the maintenance margin of 10% (of initial contract size). What is the margin account balance of short trader at t=3? Futures prices each day are given below. They opened 10 contracts, and contract size is 100 bushels. t0 (initial trade) t1 t2 t3 Futures Price (per bushel) $0.4 $0.45 $0.35 $0.36 Long Position Margin Short Position Margin
Expert Answer:
Answer rating: 100% (QA)
Initial contract size is 10 contracts 100 bushelscontract 1000 bushel... View the full answer
Related Book For
Introduction To Corporate Finance
ISBN: 9781118300763
3rd Edition
Authors: Laurence Booth, Sean Cleary
Posted Date:
Students also viewed these finance questions

Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...

The Crazy Eddie fraud may appear smaller and gentler than the massive billiondollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...

Suppose a product can be produced using virgin ore at a marginal cost given by MC 1 = 0. 5q 1 and with recycled materials at a marginal cost given by MC 2 = 5 + 0. 1q 2 . (a) If the inverse demand...

On January 1, 2009, your brother's business obtained a 30year amortized mortgage loan for $250,000 at a nominal annual rate of 7.0%, with 360 endofmonth payments. The firm can deduct the interest...

Rico Petricelli Industries invests $960,000 in plant assets with an estimated 10year service life and no salvage value. These assets contribute $64,000 to annual net income when depreciation is...

Consider a chocolate maker that will need 10,000 tons of cocoa beans next year. The current market price of cocoa beans is \($2900\) per ton. At this price, the firm expects earnings before interest...

Firm S is the only producer of a particular type of foam fire retardant and insulation used in the construction of commercial buildings. The inverse demand equation for the product is P = 1,500 ...

6. 7. 8. If one of the diameters of the circle x + y2x6y+6=0 is a chord of another circle 'C', whose centre is at (2, 1), then its radius is Let Bi (i = 1, 2, 3) be three independent events in a...

Weston Products manufactures an industrial cleaning compound that goes through three processing departmentsGrinding, Mixing, and Cooking. All raw materials are introduced at the start of work in the...

8. (12pts) A fair coin is flipped repeatedly. (a) (6pts) Suppose we hope that with probability at least 0.9 the frequency of heads showing up is between 0.4 and 0.6. Use Chebyshev's inequality to...

8. Program Timer 0 in C to generate a square wave of 0.5 KHz. Assume that XTAL = 11.0592 MHz. #include sbit mybit P1^5; = void delay (void); void main(void){ while (1) { mybit = delay(); } } void...

Derive the demand schedule from the following demand function: QD = 80  10P Precio: 8 6 4 2 0 Amount: Derive the supply schedule from the following supply function: QS = 10P Precio: 0 2 4 6 8...

Reducing your costs by implementing a cost reduction process that is also being implemented by your competitors is likely to lead to sustained competitive advantage. Discuss

Is (x2) a factor of P(x) = x^3+2x^26x4? If it is, write P(x) as a product of two *.factors

An owner can lease his building for $150,000 per year for three years.The explicit cost of maintaining the building is $50,000 and the implicit cost is $65,000. All revenues are received and costs...

Montreal Paper Company must purchase a paper sorter to replace its existing one on January 1, 2022. This is an essential investment because manual sorting is too demanding and causes physical...

A routine activity such as pumping gasoline can be related to many of the concepts studied in this text. Suppose that premium unleaded costs $3.75 per gal. Work Exercises in order. Use the...

Suppose that a 6percent, annualpay, Government of Canada bond that matures in two years has a yield to maturity of 6.75 percent. If inflation is expected to be 2.5 percent per year over the next...

In order for the M&M irrelevance theorem to hold, what key assumptions must be met?

Calculate the covariance and correlation coefficient between the two securities of a portfolio that has 40 percent in stock X (with an expected return of 40 percent and a standard deviation of 12...

Many states have lotteries that involve the random selection of digits 0, 1, 2, ,

Birth weights in the United States are normally distributed with a mean (in grams) of 3420 g and a standard deviation of 495 g. If you graph this normal distribution, the area to the right of 4000 g...

Is the distribution of those digits a normal distribution? Why or why not?
Study smarter with the SolutionInn App