On Monday, an American company decides to hedge a payment of British pounds by creating a portfolio consisting of three pound futures contracts that mature on Thursday. Each contract has 60,000 pounds attached. The futures price on Monday is $1.858/BP. Assume that the initial margin and maintenance margin is $1475 and $1100 per contract, respectively. The futures prices over the next three days (Tuesday-Thursday) are as follows: $1.855, $1.850, and $1.865.
Find the investor's ending margin balance (in USD) on Tuesday. Assume any deficits are eliminated to keep the account open and any excess funds remain in the account. Round intermediate steps to four decimals and your final answer to two decimals. Do not use the dollar sign or words when entering your response.
On Monday, an American company decides to hedge a payment of British pounds by creating a portfolio consisting of three pound futures contracts that mature on Thursday. Each contract has 60,000 pounds attached. The futures price on Monday is $1.858/BP. Assume that the initial margin and maintenance margin is $1475 and $1100 per contract, respectively. The futures prices over the next three days (Tuesday-Thursday) are as follows: $1.855, $1.850, and $1.865.
Find the investor's ending margin balance (in USD) on Tuesday. Assume any deficits are eliminated to keep the account open and any excess funds remain in the account. Round intermediate steps to four decimals and your final answer to two decimals. Do not use the dollar sign or words when entering your response.
Related questions
Use the following information to answer the next 3 questions
After reading several reports, an investment banker believes that the pound will appreciate relative to the dollar over the next few days. The banker decides to use six pound futures contracts to trade based on his belief. Each contract has 125,000 pounds attached. The initial and maintenance margin is $20000 and $18000 per contract, respectively. The futures price on the day the banker opened his position (Tuesday) was $1.625/pound.
The futures price on Wednesday is $1.615. Find the investor's ending margin balance (in USD) on Wednesday. (Assume any deficits are eliminated to keep the account open and any excess funds remain in the account)
| 108,000 | ||
| 120,000 | ||
| 127,500 | ||
| 112,500 | ||
| none of the above 2.The futures price on Thursday is $1.605. Find the investor's ending margin balance (in USD) on Thursday. Assume any deficits are eliminated to keep the account open and any excess funds remain in the account. Round intermediate steps to four decimals and your final answer to two decimals. Do not use currency symbols or words when entering your response. 3.The futures price on Friday is $1.60. Find the investor's ending margin balance (in USD) on Friday. Assume any deficits are eliminated to keep the account open and any excess funds remain in the account. Round intermediate steps to four decimals and your final answer to two decimals. Do not use currency symbols or words when entering your response. |
Use the following information to answer the next two questions:
The euro-dollar spot exchange rate is $1.355/euro on 9/30, but you believe the dollar will appreciate relative to the euro over the next few days. On 9/30, you decide to open a position consisting of five futures contracts to trade based on your belief. Futures contracts on the euro have 70,000 euros attached. The futures price 9/30 is $1.355. Your broker requires an initial margin of $13,000 per contract and a maintenance margin of $9,000 per contract.
1.Find your ending margin account balance (in USD) the day after you open your position (10/1) if the futures price is $1.395 on that day. Assume any deficits are eliminated to keep the account open and any excess funds remain in the account.
| 59,000 | ||
| 79,000 | ||
| 51,000 | ||
| 31,000 | ||
| none of the above |
2.Assume that you kept your account open from the previous question. The futures price on 10/2 is $1.390 per euro. What would be your ending margin balance (in USD) on 10/2? Assume any deficits are eliminated to keep the account open and any excess funds remain in the account. Round intermediate steps to four decimals and your final answer to two decimals. Do not use currency symbols or words when entering your response.