Yesterday you entered into a futures contract to buy

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International Economics
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Chapter 11 / Exercise 7
International Economics
Carbaugh
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8. 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? A. $1.5160 per €.B. $1.208 per €.C. $1.1920 per €.D.$1.4840 per €.To get a margin call, you have to lose $1,000. That will happen when the price FALLS (since you're buying euro) to $1.4840 per €:[$1.20/ € - $1.4840 per €] ×€62,500 = $1,000.
9. Yesterday, you entered into a futures contract to sell €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?
10. Yesterday, you entered into a futures contract to buy €62,500 at $1.50/€. Your initial margin was $3,750 (= 0.04 ×€62,500 ×$1.50/€ = 4 percent of the contract value in dollars). Your maintenance margin is $2,000 (meaning that your broker leaves you alone until your account balance falls to $2,000). At what settle price (use 4 decimal places) do you get a margin call?
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International Economics
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Chapter 11 / Exercise 7
International Economics
Carbaugh
Expert Verified
Chapter 07 Futures and Options on Foreign Exchange11. Three days ago, you entered into a futures contract to sell €62,500 at $1.50 per €. Over the past three days the contract has settled at $1.50, $1.52, and $1.54. How much have you made or lost?
12. Today's settlement price on a Chicago Mercantile Exchange (CME) Yen futures contract is $0.8011/¥100. Your margin account currently has a balance of $2,000. The next three days' settlement prices are $0.8057/¥100, $0.7996/¥100, and $0.7985/¥100. (The contractual size of one CME Yen contract is ¥12,500,000). If you have a short position in one futures contract, the changes in the margin account from daily marking-to-market will result in the balance of the margin account after the third day to be A. $1,425B. $2,000C.$2,325D. $3,425$2,325 = $2,000 +¥12,500,000 ×[(0.008011 - 0.008057) + (0.008057 - 0.007996) + (0.007996 - 0.007985)] =$2,000 + ¥12,500,000 ×[(0.008011 - 0.007985)]Please note that $0.8011/¥100 = $0.008011/¥ and $0.8057/¥100 = $0.008057/¥, etc.7-34
Chapter 07 Futures and Options on Foreign Exchange

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