EBK FUNDAMENTALS OF CORPORATE FINANCE
9th Edition
ISBN: 8220103675925
Author: BREALEY
Publisher: YUZU
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Question
Chapter 24, Problem 15QP
Summary Introduction
To discuss: Whether person X will ask for the money to person Y or offer to pay.
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You have taken a short position in a futures contract on corn at $2.60 per bushel. Over the next 5 days the contract settled at 2.52, 2.57, 2.62, 2.68, and 2.70. You then decide to reverse your position in the futures market on the fifth day at close. What is the net amount you receive at the end of 5 days?
A.
$0.00
B.
$2.60
C.
$2.70
D.
$2.80
E.
Must know the number of contracts
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?
Show work please!
Chapter 24 Solutions
EBK FUNDAMENTALS OF CORPORATE FINANCE
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