Answer? ? General Accounting question A gold futures contract requires the long trader to buy 100 troy ouncesof gold. The initial margin requirement is $2,000, and the maintenancemargin requirement is $1,500.A. Matthew Evans goes long one June gold futures contract at thefutures price of $320 per troy ounce. When could Evans receive amaintenance margin call?B. Chris Tosca sells one August gold futures contract at a futures priceof $323 per ounce. When could Tosca receive a maintenance margincall?

Step 1: Define Importance of margins in futures tradingFutures contracts are traded in exchanges,…

Answered: A gold futures contract requires the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A gold futures contract requires the long trader to buy 100 troy ounces of gold. The initial margin requirement is $ 2,000 and the support margin requirement is $ 1,500. Matthew Evans enters long June gold futures contract at $ 320 per troy ounce. When could Evans receive a support margin call?
Choose the correct answer: O The trader gains $10,000. The trader loses $15,000. The trader gains $5,000. The trader loses $10,000. The trader loses $5,000.
A copper futures contract requires the long trader to buy £ 25,000 of copper. The trader buys one November copper futures contract at $ 0.75 per pound. According to historical data, copper prices moved in the range of $ 0.53-0.87 per pound. The market is confident that this trend will continue in the future. What is the maximum loss this trader can have? Another trader sells one November copper futures contract. What is the maximum loss this short trader can have?
An investor takes a long position in two gold futures contracts. Each gold futures contract is for delivery of 100 ounces of gold. The initial futures price is $1,250 per ounce. The initial margin is $6,000 per contract. The investor closes the contracts when the gold futures price is $1,226.90. If there was one margin call for $4,020, what is the balance in the margin account at the time of closing the futures contracts? a. $11,400 b. $11,800 c. $12,200 d. $12,600 e. $13,000
The futures price of gold is $800. Futures contracts are for 100 ounces of gold, and the margin requirement is $4,000 a contract. The maintenance market requirement is $1,200. You expect the price of gold to rise and enter into a contract to buy gold. How much must you initially remit? Round your answer to the nearest dollar. $ If the futures price of gold rises to $855, what is the profit and return on your position? Round your answer for profit to the nearest dollar and for return to the nearest whole number. Profit: $ Return: % If the futures price of gold declines to $784, what is the loss on the position? Round your answer to the nearest dollar. Enter the answer as a positive value. $ If the futures price declines to $756, what must you do? Round your answer to the nearest dollar. Enter the answer as a positive value. The investor will have to $ to restore the initial $4,000 margin. If the futures price continues to decline to $740, how much do you have in your…
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
Suppose that you enter into a short futures contract to sell July silver for $17.20 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?
Speculation with a futures contract Before any trading, George begins with a margin account balance of $0. On May 1, George believes that silver will appreciate in the next 4 days. On May 1, George takes a long position in a futures contract for silver with a futures price of $10/ounce. Each contract is for 1000 ounces of silver. The initial margin is $3000 and the maintenance margin is $2500. On May 2, the settlement futures price is $9.80/ounce. On May 3, the settlement futures price is $9.10/ounce. On May 4, George offsets with a futures contract with a futures price of $9.40/ounce. Note that all contracts are for silver with delivery date of May 25. After George offsets on May 4, what is his margin account balance? Show how you calculate your answer.
A T-note futures contract has a face value of $100,000, currently it is priced at 108’18. The initial margin is 1,620, and maintenance margin is $1,200. Jack longs one T-note futures contract and Kathy shorts one T-note futures contract. Three months later, the T-note futures contract price increase to 109’14. Who will get a margin call, by how much? Jack will get a margin call, by $875 Jack will get a margin call, by $455 Kathy will get a margin call, by $875 Kathy will get a margin call, by $455
Trader A enters into a forward contract to sell gold for $1,600 an ounce in one year.Trader B buys a put option to sell gold for $1,600 an ounce in one year.The cost of the option is $150 an ounce. Show the profit per ounce as function of the price of gold in one year for the two traders.Be sure to include labels on the chart. Then answer the questions on the similarities/differences between these two positions:
Suppose 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.
Generous Dynamics is planning on buying 3000 ounces of gold in six months. The correlation of the six-month change in the spot and futures price is. 5. The standard deviation of six-month change in spot and futures price are 27 percent and 31 percent, respectively. Futures contract size is 1000 ounces. How many contracts should GD buy or sell to hedge the future purchase? O Sell 1.3065 O Buy 1.3065 O Sell 1.7222 O Buy 1.7222 O Sell 2.6129

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