You enter into 10 short soybean futures contract (each contract is for 5000 bushel) for delivery of # 2 Yellow at a contract price of $14.00/bushel. The delivery grades are #2 Yellow at contract price, #1 Yellow at a 6 cent/bushel premium, #3 Yellow at a 6 cent/bushel discount. On the day the contract expires, the spot prices for # 2 Yellow are $14.02 cents/bushel , # 1 Yellow are $14.08 cents/bushel and # 3 Yellow are # $13.93 /bushel. Which grade should you deliver if you want to maximize your profit and how much profit will you earn? O None of these O #1 for $1,000 profit O #3 for $3,500 profit O #3 for $500 profit O #1 for $4,000 profit

You enter into 10 short soybean futures contract (each contract is for 5000 bushel) for delivery of # 2 Yellow at a contract price of $14.00/bushel. The delivery grades are #2 Yellow at contract price, #1 Yellow at a 6 cent/bushel premium, #3 Yellow at a 6 cent/bushel discount. On the day the contract expires, the spot prices for # 2 Yellow are $14.02 cents/bushel , # 1 Yellow are $14.08 cents/bushel and # 3 Yellow are # $13.93 /bushel. Which grade should you deliver if you want to maximize your profit and how much profit will you earn? O None of these O #1 for $1,000 profit O #3 for $3,500 profit O #3 for $500 profit O #1 for $4,000 profit

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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A trader bought two July futures contracts. Each contract is for the delivery of 1,000 barrels. The initial margin is $11,250 per contract and the maintenance margin is $9,000. Calculate the daily gain and loss and margin account balance from April 13, 2020 to April 15, 2020 and explain when the investor will receive a margin call and how much does he need to top up?
You are short 15 gasoline futures contracts, established at an initial settle price of $2.085 per gallon, where each contract represents 42,000 gallons. Your initial margin to establish the position is $7,425 per contract and the maintenance margin is $6,500 per contract. Over the subsequent four trading days, gasoline settles at $2.071, $2.099, $2.118, and $2.146, respectively. Compute the balance in your margin account at the end of each of the four trading days and compute your total profit of loss at the end of the trading period. Assume that a margin call requires you to fund your account back to the initial margin requirement.
On November 29, 2019 you bought one July 2020 maturity corn futures contract at a futures price of $3.90 per bushel. If the price of the corn in the market in July 2020 (on the maturity date) is $3.78, what is your profit/loss? The contract multiplier is 5000 bushel.
Please answer the next question based on the closing July futures contract prices for EUR for three consecutive days in March 20XX. You sold two EUR futures contract at the closing price on 3/01. Each EUR futures contract requires the delivery of EUR 150,000. Suppose, the initial and maintenance margin for each EUR futures contract are $2,000 and $1,500, respectively. Date July EUR Futures Contract Price On 3/02 you will O get get O not get; not get O get; not get O not get: get 3/01 3/02 3/03 $1.3328 $1.3345 $1.3398 a margin call and on 3/03 you will a margin call from the exchange
You enter into a futures arrangement to purchase 40 Alpacas. The futures price is $8400/Alpaca. You must deposit 60% of the purchase price into a margin account. The account pays 6% interest, compounded continuously. Over the next two days, the futures price of Alpacas fluctuates. After the first day, the price is $8430/Alpaca. After the second day, the price is $8420/Alpaca. You exit the arrangement after the second day. What is your profit if the risk-free interest rate is 9%, compounded continuously? Upload Choose a File
A company enters into long position in three futures contracts in wheat for 650 cents per bushel. Each contract is based on 5,000 bushels and quoted in cents per bushel. The initial margin is $5,000 and the maintenance margin is $3,000 per contract. The company will be allowed to withdraw any balance in the margin account in excess of the initial margin and the company will get a margin call if the balance is going below the maintenance margin. Please fill in the following blanks. a. There is a margin call if the futures price goes down by(sample answer: 20 cents) to the price of per bushel (sample answer: 800 cents)? b. $1,500 will be withdrawn from the margin account if the price goes up by(sample answer: 20 cents) to the price of per bushel (sample answer: 800 cents)?
Given the following information, what would you expect to be the minimum price at which a 3 month futures contract for 100 bushels of wheat would be trading? The spot price of wheat is $8 per bushel. Storage and insurance costs for wheat are $.50 per 100 bushels, per month, payable at the end of the storage period. • You can borrow money at 8% per year. a) $865.50 b) $814.50 c) $816.50 d) $817.5
Assume that the price of December 2021 corn futures is $4.65/bushel in February and $4.50 in October. If spot cash price in October is $4.55, what is the farmer's total revenue? Assume he entered into 20 contracts. Each corn contract is 5000 bushels.
suppose that Mr. Binda buys a three-month 5,000 contracts to buy 'commodity-X at a futures price of $1,000 from Mr. John. The contract requires an initial margin of $70 per contract and maintenance margin of $40 per contract. Required: a) Compute the initial margin that both Mr. Binda must deposit to the clearinghouse. b) Compute the maintenance margin that both Mr. Binda must deposit to the clearinghouse.suppose that Mr. Binda buys a three-month 5,000 contracts to buy 'commodity-X at a futures price of $1,000 from Mr. John. The contract requires an initial margin of $70 per contract and maintenance margin of $40 per contract.Required:a) Compute the initial margin that both Mr. Binda must deposit to the clearinghouse.b) Compute the maintenance margin that both Mr. Binda must deposit to the clearinghouse.
Assume an asset sells in the spot market for a price of $140, the risk-free rate is 5%, and a forward contract expires in ten months. What is the initial value of the contract and the correct forward price? $140 and $143.45 $0 and $145.82 $0 and $134.19
Table 2.7 Corn futures prices on the Chicago Mercantile Exchange, January 3, 2019 Maturity Last Mar-19 May-19 Jul-19 Sep-19 Dec-19 Mar-20 Change High 3.8025 0.7500 3.8075 3.7975 3.8800 0.5000 3.8800 3.8750 3.9500 0.2500 3.9525 3.9450 3.9700 0.0000 3.9700 3.9650 4.0075 -0.5000 4.0100 4.0025 4.0975 0.0000 4.1000 4.0950 Low Source: www.cmegroup.com.
2. On January 1, 2022, ABC Corporation entered into a 60-day put option contract for $30,000. Based on the PHP-USD rates below, what is the intrinsic value of the contract on Mar. 2, 2022? January 1, 2022 Spot Rate 30-day Forward Rate 60-day Forward Rate January 30, 2022 Spot Rate 30-day Forward Rate 60-day Forward Rate Mar. 2, 2022 Spot Rate 30-day Forward Rate 60-day Forward Rate Buying Rate 55.10 55.41 55.93 Buying Rate 55.38 55.71 56.04 Buying Rate 55.88 55.93 55.95 Selling Rate 55.67 55.43 55.96 Selling Rate 55.75 56.17 56.61 Selling Rate 55.73 55.79 55.82

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