Assume that you are a customer who opened an account with a brokerage firm. Assume today is the 15th May 2010, and you placed orders to buy 10 June Oil Futures Contracts at the newly opened DIFC Futures Exchange in Dubai which does all de in USD. Assume each contract is equal to 1000 barrels of Dubai Crude Oil. Initial Margin per contract is $ 3200 and maintenance margin is $3200. Your broker purchased each June Futures contract at a price of $42 on the 15th May. Illustrate the marking to market process by showing the daily settlement and cumulative balances in your account, assuming the following settlement prices

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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based on the givens in the attached image.

what is your account balance on the 18th May.

Assume that you are a customer who opened an account with a brokerage firm.
Assume today is the 15th May 2010, and you placed orders to buy 10 June Oil Futures
Contracts at the newly opened DIFC Futures Exchange in Dubai which does all deals
in USD. Assume each contract is equal to 1000 barrels of Dubai Crude Oil. Initial
Margin per contract is $ 3200 and maintenance margin is $3200. Your broker
purchased each June Futures contract at a price of $42 on the 15th May.
Illustrate the marking to market process by showing the daily settlement and
cumulative balances in your account, assuming the following settlement prices
prevailed on the next 5 working days and that you have not withdrawn any money.
Settlement Prices
1sth May
42.5
h6t May
43
17 May
41
h8tt May
44.5
h9 May
46
koth May
45
Transcribed Image Text:Assume that you are a customer who opened an account with a brokerage firm. Assume today is the 15th May 2010, and you placed orders to buy 10 June Oil Futures Contracts at the newly opened DIFC Futures Exchange in Dubai which does all deals in USD. Assume each contract is equal to 1000 barrels of Dubai Crude Oil. Initial Margin per contract is $ 3200 and maintenance margin is $3200. Your broker purchased each June Futures contract at a price of $42 on the 15th May. Illustrate the marking to market process by showing the daily settlement and cumulative balances in your account, assuming the following settlement prices prevailed on the next 5 working days and that you have not withdrawn any money. Settlement Prices 1sth May 42.5 h6t May 43 17 May 41 h8tt May 44.5 h9 May 46 koth May 45
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