You speculate that the will appreciate in the next 3 weeks. As a result, you...

 

Transcribed Image Text:

You speculate that the € will appreciate in the next 3 weeks. As a result, you buy a futures contract of €62,500 at $0.9/€. The bank requires you to put an initial deposit of $5,625 which 10% of the contract size. You will get a margin call when your balance is below $2,000. At what settlement price will you get a margin call from the bank? You speculate that the € will appreciate in the next 3 weeks. As a result, you buy a futures contract of €62,500 at $0.9/€. The bank requires you to put an initial deposit of $5,625 which 10% of the contract size. You will get a margin call when your balance is below $2,000. At what settlement price will you get a margin call from the bank?

Answer rating: 100% (QA)

To determine at what settlement price you will receive a margin call we need to calculate the change ... View the full answer