You enter into a futures contract to buy €125,000 at $1.53 per euro. The spot exchange rate when you enter the contract is $1.63. Your initial performance bond is $6,100 and your maintenance level is $2,400. At what settle price will you get a demand for additional funds to be posted to your account? 1.6596 1.7596 1.8896 1.5004 1.5596

You enter into a futures contract to buy €125,000 at $1.53 per euro. The spot exchange rate when you enter the contract is $1.63. Your initial performance bond is $6,100 and your maintenance level is $2,400. At what settle price will you get a demand for additional funds to be posted to your account? 1.6596 1.7596 1.8896 1.5004 1.5596

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

Problem 1PS

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Yesterday, you entered into a futures contract to buy €62,500 at $1.50 per €. Your initial performance bond is $1,500 and your maintenance level is $500. At what settle price will you get a demand for additional funds to be posted? ANSWER D IS CORRECT BUT WHAT IS THE PROCEDURE BUT HOW DO I GET THERE? a) $1.5160 per €. b)$1.208 per €. c)$1.1920 per €. d)$1.4840 per €. Correct
Assume today's settlement price on a CME EUR futures contract is $1.3140 per euro. You have a long position in one contract. EUR125,000 is the contract size of one EUR 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. Required: Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Balance of the performance bond account
Assume today’s settlement price on a CME EUR futures contract is $1.3144 per euro. You have a short position in one contract. EUR125,000 is the contract size of one EUR contract. Your performance bond account currently has a balance of $1,900. The next three days’ settlement prices are $1.3130, $1.3137, and $1.3053. 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. Required: Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Assume today's settlement price on a CME EUR futures contract is $1.3154 per euro. You have a short position in one contract. EUR125,000 is the contract size of one EUR contract. Your performance bond account currently has a balance of $2,400. The next three days' settlement prices are $1.3140, $1.3147, $1.3063. 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. Required: Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Balance of the performance bond account
You are to receive €360,000 on May 16. Today’s spot rate is $1.10/€. The forward rate is $1.12/€. On May 16 the spot rate is $1.11/€. Futures contracts are for €125,000 each. On May 16 you, 1) close out the forward contracts, and 2) receive the €360,000 and exchange them for dollars. Q4. How much money did you make or lose on the contracts? Q5. When you combine the gain or loss on the futures contracts with the dollars exchanged for the €360,000 what was the dollar/euro total exchange rate? Q6. Why was the amount you received per euro more than the $1.12 future contract hedge amount?
Assume that today the euro futures contracts with a September 15th delivery date are priced at $1.3680/€ . Suppose that you sold 15 contracts of the euro futures today. If, by September 15th the spot rate is $1.3260/€ , your total profit/loss on your position is (the euro futures contract size is €125,000). $78,750 loss $78,750 gain €78,750 loss €5,250 loss None of the abov
You Answered Correct Answer (mark-to-market) You enter a short position in a € future contract with the size of €125,000 today. The futures expire in 90 days. The interest rates are i$=5.9% and ic=6.1%. The current spot rate is $1.38/€. Assume 360 days a year. If the spot rate is $1.37/€ the next day and interest rates remain the same, your profit or loss for this day is $ ___. (Keep the sign and two decimal places.) 1,250 1,248.46 margin of error +/-0.05
You entered into a futures contract to buy €62,500 at $1.20/€ yesterday. Your initial margin was $4,200. Your maintenance margin is $2,500 (meaning that your broker leaves you alone until your account balance falls to $2,500). At what settle price will you get a margin call? $1.2750/€ $1.0272/€ $1.1728/€ O $1.5800/€
You are to pay €360,000 on May 16. Today’s spot rate is $1.10/€. The forward rate is $1.12/€. On May 16 the spot rate is $1.11/€. Futures contracts are for €125,000 each. Q1. How many contracts do you enter? Q2. Do you enter contracts to buy or to sell? On May 16 you, 1) close out the forward contracts, and 2) receive the €360,000 and exchange them for dollars. Q3. Did you make or lose money on the contracts? Q4. How much money did you make or lose on the contracts? Q5. When you combine the gain or loss on the futures contracts with the dollars exchanged for the €360,000 what was the effective dollar/euro total exchange rate? Q6. Why was the amount you received per euro more than the $1.12 future contract hedge amount?
You Answered Correct Answer (mark-to-market) You enter a long position in a € future contract with the size of €125,000 today. The futures expire in 90 days. The interest rates are is=2.6% and ic=5.5%. The current spot rate is $1.38/€. Assume 360 days a year. If the spot rate is $1.36/€ the next day and interest rates remain the same, your profit or loss for this day is $ ___. (Keep the sign and two decimal places.) -2,500 -2,468.79 margin of error +/- 0.02
Suppose you observe the following one-year interest rates, spot exchange rates and futures prices. Futures contracts are available on €10,000. How much risk-free arbitrage profit could you make on one contract at maturity from this mispricing? Exchange Rate Interest Rate APR So($/EL F380(S/E) $1.45 €1.00 is 4% $1.48 = €1.00 3% (Note: If you are unable to view the image shown above, you can download it: interestTable.PNG) O $159.22. O $153.10. $439.42. Onone of the options.
If the initial speculative margin of a futures contract is $2,000, the maintenance margin is $1,800 and your trading account balance has increased to $2,300, how much must you deposit to comply with your margin requirement?

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