g on a beach in Florida early in May, a savvy investor recognizes that the sun beating down indicates a banner year for the US corn crop, which in turn portends an excess supply. Basic supply and demand analysis suggested to her that the corn price was very likely to go down. But the Farmer’s Almanac had predicted a wet and rainy summer, which convinced many corn analysts that corn prices would be climbing throughout the summer. To take advantage of this sun-inspired observation, our savvy investor sold short six contracts of August corn futures. The price per bushel was $1.62, and each contract was for 5000 bushels. The initial margin deposit is $3000 per contract with the maintenance margin at $2250. Amount that the investor has to deposit on the investment = $18000 The Margin balance forth day is = $15600 If the investor closed out her position at the end of the fourth day, what was her final gain or loss over the four days in dollars and as a percentage of investment?
INV4 3-3
Sitting on a beach in Florida early in May, a savvy investor recognizes that the sun beating down indicates a banner year for the US corn crop, which in turn portends an excess supply.
Basic supply and demand analysis suggested to her that the corn price was very likely to go down. But the Farmer’s Almanac had predicted a wet and rainy summer, which convinced many corn analysts that corn prices would be climbing throughout the summer.
To take advantage of this sun-inspired observation, our savvy investor sold short six contracts of August corn futures. The price per bushel was $1.62, and each contract was for 5000 bushels. The initial margin deposit is $3000 per contract with the maintenance margin at $2250.
Amount that the investor has to deposit on the investment = $18000
The Margin balance forth day is = $15600
If the investor closed out her position at the end of the fourth day, what was her final gain or loss over the four days in dollars and as a percentage of investment?
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