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? O $1.5280/€ O $1.4720/€ none of the options

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? O $1.5280/€ O $1.4720/€ none of the options

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

See similar textbooks

Related questions

Q: You purchase a call with a strike of K-22 at a premium of 1.73 and you purchase a put with a strike…

A: Profit on Call option= Max(St-K,0)-Premium=Max(15.31-22,0)-1.73=-1.73Profit on Put Option=…

Q: You entered into a futures contract to buy €62,500 at $1.20/€ yesterday. Your initial margin was…

A: Initial price= $1.20Future contract size= 62,500Initial margin = $4,200Maintenance margin =…

Q: The following table shows the futures price data today for Commodity X, and you purchased a futures…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: settlement prices are $1.1126, $1.1133, and $1.1050. Calculate the balance of the performance bond…

A: A future contract is similar to an agreement to purchase or sell an item at a specific price at a…

Q: Suppose that on Monday, 7 July, you assume a long position in one December British pound futures…

A: 1. Initial Position: Long position in December British pound futures.2. Initial Futures Price:…

Q: The initial margin requirement for Nikkei Futures is $3,300 per contract. The contract multiple is…

A: Initial margin requirement is $3,330 per contract. Contract multiple is 5 Buy price is $17,500…

Q: 5. Consider a futures contract in which the current futures price is 65$. The initial margin…

A: A Futures Contract can be defined as a financial derivative in which the underlying asset's value…

Q: A trader buys two July futures contracts on frozen orange juice. Each contract is for the delivery…

A: Margin money is deposited by the trader with their broker and it acts as a guarantee or protection…

Q: A trader enters into a long strangle for SGD/USD with a call strike price of 0.7034 and a put strike…

A: Long strangle: This option holder will buy a call option and a put option on a stock simultaneously…

Q: Suppose a financial asset, ABC, is the underlying asset for a futures contract with settlement of 6…

Q: (mark-to-market) You enter a long position in a € future contract with the size of €125,000 today.…

A: Future contracts are contract done today but settled on the date and rate specified in the contract…

Q: Assume that today’s settlement price on a CME EUR futures contract is 1.10405. Your performance bond…

A: currently balance of performance bond account is $1700. Price of future Contract is 1.10405 Next…

Q: A company enters into a short futures contract to sell 8,000 units of a commodity for $0.50 per…

A: We have a short sale transaction with pre determined initial and maintenance margin. We have to find…

Q: The margin requirement on the S&P 500 futures contract is 16%, and the stock index is currently…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: Assume today's settlement price on a CME EUR futures contract is $13176/EUR. You have a short…

A: In the futures there will be late delivery of contracts after a specified period and there is market…

Q: Suppose a trader takes a position on June 5th 2021, in one September 2021 EURO (EUR) future contract…

A: To calculate the profit or loss for each scenario, we need to consider the difference between the…

Q: Three months ago, you sold a put option contract on Swiss franc with a strike price of $.60/SF and…

A: Investment:Option price: $0.0060 per SFContract size: 10,000 SFTotal investment: $0.0060/SF * 10,000…

Question

Yesterday, you entered into a futures contract to buy €62,500 at $1.50/€. Your initial margin was $3,750 (-0.04 x €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?
O $1.5280/€
O $1.4720/€
O none of the options
$1.500/€

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!

SEE SOLUTION Check out a sample Q&A here

Step 1: Define=margins

VIEW

Step 2: Calculation of margin call price

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions

You entered into a futures contract to buy €62,500 at $1.20/€ yesterday. Your initial margin was $4,200. Your maintenance margin is $2,500 (meaning that your broker leaves you alone until your account balance falls to $2,500). At what settle price will you get a margin call? $1.2750/€ $1.0272/€ $1.1728/€ O $1.5800/€
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? ANSWER D IS CORRECT BUT WHAT IS THE PROCEDURE BUT HOW DO I GET THERE? a) $1.5160 per €. b)$1.208 per €. c)$1.1920 per €. d)$1.4840 per €. Correct
Yesterday, you entered into a futures contract to sell €75,000 at $1.79 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? $1.6676 per €. $1.1840 per €. $1.2084 per €. $1.7767 per €.
This morning (Day 0) you take a short position in a pound futures contract that matures in 3 days (Day 3). The future price is $1.9750 today. The contract size is £62,500 and its initial performance bond and maintenance bond are $2,430 and $1,830, respectively. a. (b) Assuming that the daily settlement prices are indicated below, how would the daily change in settlement future prices affect your account? Show the daily gain/loss and account balance. Day 0 1 2 3 Settlement 1.9750 1.9700 1.9815 1.9907 Total Gain/Loss Account Balance b. During this period, did you receive a margin call? If you did, on what day? c. At the end of Day 3, how much in total did you make/lose on this futures contract?
Assume today’s settlement price on a CME EUR futures contract is $1.3144 per euro. You have a short position in one contract. EUR125,000 is the contract size of one EUR contract. Your performance bond account currently has a balance of $1,900. The next three days’ settlement prices are $1.3130, $1.3137, and $1.3053. Calculate the changes in the performance bond account from daily marking-to-market and the balance of the performance bond account after the third day. Required: Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Assume today's settlement price on a CME EUR futures contract is $1.3140 per euro. You have a long position in one contract. EUR125,000 is the contract size of one EUR contract. Your performance bond account currently has a balance of $1,700. The next three days' settlement prices are $1.3126, $1.3133, and $1.3049. Calculate the changes in the performance bond account from daily marking-to-market and the balance of the performance bond account after the third day. Required: Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Balance of the performance bond account
Assume today's settlement price on a CME EUR futures contract is $1.3154 per euro. You have a short position in one contract. EUR125,000 is the contract size of one EUR contract. Your performance bond account currently has a balance of $2,400. The next three days' settlement prices are $1.3140, $1.3147, $1.3063. Calculate the changes in the performance bond account from daily marking-to-market and the balance of the performance bond account after the third day. Required: Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Balance of the performance bond account
Three days ago, you entered into a futures contract to sell €125,000 at $1.40 per €. Over the past three days the contract has settled at $1.32, $1.28, and $1.26. You start with $3,000. What is your total profit or loss in $ for the 3-day period?
Assume that today's settlement price on a CME EUR futures contract is $1.1145/EUR. You have a long position in one contract. Your margin balance is currently of $2,763. The next three days' settlement prices are $1.1144, $1.1141, and $1.1148. Calculate the balance in the margin account after the third day due to dailly mark-to-market. The size of a futures contract on the euro is EUR125,000. Note: Enter your answer rounded to the nearest dollar. For example, if the calculated balance on the margin account after the third day of mark-to-market is $2,475.80, enter it as: 2476 or 2,476.
Consider a hypothetical futures contract where the current price is $ 212. The initial margin requirement is $ 10 and the maintenance margin requirement is $ 8. You enter into long 20 contracts and meet all margin requirements, but do not withdraw any excess margin. B. Complete the table below and explain all deposited funds. Suppose the contract was purchased at the settlement price of that day, so there is no gain or loss at current market prices on the day of purchase. C. What is your total profit or loss by the end of Day 6?
am. 122.
What is the total net gain or loss on this transaction? Accounting

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

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

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

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

SEE MORE TEXTBOOKS