Maintenance margin = 600$ Assume the volatility of Soybean Oil immediately increases 20%. How will it impact Futures price? How will it impact investor's margin account requirement? Explain your answer.

Maintenance margin = 600$ Assume the volatility of Soybean Oil immediately increases 20%. How will it impact Futures price? How will it impact investor's margin account requirement? Explain your answer.

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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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

Question

Finance
Initial Futures Contract price = 0.1529$ per Ib
Contract size = 60000 lbs
Initial Margin requirement = 10 %
Maintenance margin = 600$
Assume the volatility of Soybean Oil immediately increases 20%. How will it impact Futures price?
How will it impact investor's margin account requirement? Explain your answer.

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