# Very easy if you have margin requirement you can

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very easy, if you have margin requirement you can enter markets o harder, need a lot of credit, not accessible, wholesale market 8. You buy futures contracts for Y100 million at a price of .92cents/Y. If the margin requirement is 20%, how much margin must you put up. Over the next week, the closing price each day is listed below. For each day calculate your gain or loss and the balance in your margin account. If maintenance margin is 80% of the original margin, will you receive any margin calls? If so, for how much?

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initial amt. in margin acct = 184k o 100m*.92 = 92,000,000 o 92,000,000*.2 = 18,400,000 / \$184,000 total loss of 60k on futures Maintenance margin: minimum amount of equity that must be maintained in a margin account o 80% maintenance margin 184,000 * .8 = 147,200 put up a margin as collateral to protect the broker from loss on a contract Math: o (Actual price * 100 million) / 100 = cost @ actual price o Profit/ Loss on futures = (previous price + or – new price) (100 mil) o Accumulated amt. in marginal account = profit or loss +/- the previous marginal account balance o “each day the exchange debits the amount of the daily settlement from the loser’s margin account and credits it to the winner’s” Da y Actua l price Cost @ actual price Profit/Loss on futures Accumulate d amt. in margin acct Margin call amt. Total amt. in margin acct 1 0.93 930k +10k 194k 194k 2 0.90 900k -30k 164k 164k 3 0.90 900k 164k 164k 4 0.84 840k -60k 104k 43,200 104k 5 0.86 860k +20k 124k 167,200

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