Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Gold is trading at a one-year futures price of $2,005 per troy ounce. A futures contract comprises 100 troy ounces. The initial margin is $50,125 and the maintenance margin is $32,080. You are short one futures contract. There is a margin call when the price per troy ounce of gold changes to:
Group of answer choices
A) $1,967
B) $2,207
C) $1,858
D) $2,120
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- Assume today's settlement price on a CME EUR fütures contract is $1.3176/EUR. You have a short position in one contract. Your performance bond account currently has a balance of $3,500. The next three days settlement prices are $1.3162, $1.3169, and $1.3085. Calculate the changes in the performance bond account from daily marking-to-market and the balance of the performance bond account after the third day. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Balance of the performance bond accountarrow_forwardSuppose that you enter into a short futures contract to sell July silver for $27.20 per ounce. The size of the contract is 5,000 ounces. The initial margin is $4,000, and the maintenance margin is $ 3,000. What change in the futures price will lead to a margin call? What happens if you do not meet the margin call? Question 33 options: The price of silver must drop to $27.00 per ounce for there to be a margin call. If the margin call is not met, your broker closes out your position. The price of silver must rise to $27.40 per ounce for there to be a margin call. If the margin call is not met, your broker closes out your position. The price of silver must rise to $27.40 per ounce for there to be a margin call. If the margin call is not met, the position remains open until the margin declines to $0.0. The price of silver must drop to $26.20 per ounce for there to be a margin call. If the margin call is not met, your broker closes out your position. Please answer fast I give you upvote.arrow_forwardIf the spot price for silver is $18.56 per ounce, what should the futures contract price be for a three-month contract at an annual interest rate of 3.5%?arrow_forward
- Suppose that on September 05, 2021, a company takes a short position in one April 2022 live - cattle futures contract. One contract is for the delivery of 50,000 pounds of cattle. The initial margin for each contract is \(\$ 3, 000 \) and the maintenance margin is \(\$ 2,000 \). The futures price (per pound) is 180.00 cents when it enters into the contract.(a) If the company receives a margin call at the end of the third day to deposit a variation margin of $1250, what is the settlement price at the end of the day?arrow_forwardSuppose that you bought two one-year gold futures contracts when the one-year futures price of gold was US$1,340.30 per troy ounce. You then closed the position at the end of the sixth trading day. The initial margin requirement is US$5,940 per contract, and the maintenance margin requirement is US$5,400 per contract. One contract is for 100 troy ounces of gold. The daily prices on the intervening trading days are shown in the following table. Day Settlement Price 0 1340.30 1 1345.50 2 1339.20 3 1330.60 4 1327.70 5 1337.70 6 1340.60 Assume that you deposit the initial margin and do not withdraw the excess on any given day. Whenever a margin call occurs on Day t, you would make a deposit to bring the balance up to meet the initial margin requirement at the start of trading on Day t+1, i.e., the next day. b. Fill the appropriate numbers in the blank cells in the following table. (Hint: See solution to Q19 in Lesson 2 Learning…arrow_forwardNikularrow_forward
- Assume today's settlement price on a CME EUR futures contract is $1.3140/EUR. You have a short position in one contract. Your performance bond account currently has a balance of $1,700. The next three days' settlement prices are $1.3126, $1.3133, and $1.3049. Calculate the changes in the performance bond account from daily marking-to-market and the balance of the performance bond account after the third day. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Changes in the performance bond account Warrow_forwardThe spot rate of gold is $1,200 per ounce. Please plot the payoff of selling a call option on an ounce of gold with a $50 premium and the strike price equal to $1,200. (You can copy a screenshot from an excel or similar).arrow_forwardConsider the following prices, volume and open interest for gold futures contracts. Contract size: 100 oz Price units: $/oz (a) Which contract reached the highest price on this trading day? What was its contract value at that price? (b) Why is the high price equal to the low price for the contract expiring in October 2022?arrow_forward
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