What is the balance in your margin account at the end of Wednesday? The correct answer is B. 1500 - Could you please explain why 1500 is the correct answer.
What is the balance in your margin account at the end of Wednesday? The correct answer is B. 1500 - Could you please explain why 1500 is the correct 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
Related questions
Topic Video
Question

Transcribed Image Text:Suppose that on Monday, 7 July, you assume a long position in one December British pound futures contract at the
futures price of $1.10/£. The initial margin is $2,000, and the maintenance margin is $1,500. The contract size is £125,000.
Assume you do not withdraw excess money from your margin balance. All margin requirements are met with cash. The
settlement prices for Monday and the next two days are shown in the following:
Monday: $1.10
Tuesday: $1.15
Wednesday: $1.07
What is the balance in your margin account at the end of Wednesday? The correct answer is B. 1500 - Could you please
explain why 1500 is the correct answer.
a. $1,750
b. $1,500
c. $2,000
d. $-$1,000
e. $750
Expert Solution

This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images

Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you

Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,



Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,



Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,

Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education