2.2 An investor enters a futures contract on SBI stock at Rs 534 to w the futures price is Rs 535. How much goes into or out of inves ccount? What will be the answer if tomorrow's price in equal to Rs!
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- q2. Suppose you buy a futures contract at $150. If the futures price changes to $147, what is its value an instant before it is marked-to-market? a. $0 b. –$3 c. $147 d. $3 e. impossible to tellQuestion 5 The March 2024 S&P 500 cash index is 930 while the S&P 500 futures index is 950 and the contract value of each index point is $100. You are convinced the futures market will rise 10% by expiry. You are only prepared to buy or sell one futures contract. (i) Will you buy or sell a contract in the futures market? (2 marks) (ii) What is your profit (+) in dollars if you are correct? (2 marks) (iii) What is your profit (+)/loss (-) if the futures price on expiry is 1200? (2 marks) (iv) What is your profit (+)/loss (-) if the futures price on expiry is 700? (2 marks) (v) Explain what is meant by “initial margin” on a futures contract. (2 marks)Question 3. Assume the continuously compounded interest rate has constant value 15%. The table below is for a futures contract maturing on day 5 with delivery price equal to the futures price. The underlying asset is a stock paying no income. The St column gives the stock price on each day. The Φ(t,T) column gives the futures price on each day. The MTM column lists the mark-to-market payments. The interest column lists the interest that will be accrued on the mark-to-market payment by the maturity date. Fill in the table. Give at least four decimal places. day St Φ(t,T) MTM interest 0 2000 1 1900 2 2100 3 2200 4 2000 5 2100 sum: Hint: Use Mathematica or a spreadsheet for the calculations.
- a. A futures contract on a non-dividend-paying stock index with current value $130 has a maturity of one year. If the T-bill rate is 6%, what should the futures price be? b. What should the futures price be if the maturity of the contract is 2 years? c. What if the interest rate is 9% and the maturity of the contract is 2 years? Complete this question by entering your answers in the tabs below. Required A Required B Required C A futures contract on a non-dividend-paying stock index with current value $130 has a maturity of one year. If the T-bill rate is 6%, what should the futures price be? Note: Round your answer to 2 decimal places. Futures priceD6 Suppose the ASX200 Index is currently at 7,406, the expected dividend yield on the index is 2 percent per year, and the risk-free rate is 0.35%. Using the current price of ASX200 futures contracts that expire in six months recommend a program trading strategy for buying or selling the futures?Assume that you entered into a futures contract to buy C82,500 at $1.20 per C. Suppose the futures price closes today at $1.25. How much have you made/lost? tof Select one: O a You have made $2.500.00. O b. You have made $4125.00. O G. You have lost $2,500.00. Od You have lost $4,125.00.
- Question 8 The January 2023 S&P 500 cash index is 3950 points while the S&P 500 futures March 2023 index is 4000 and the contract value of each index point is $150. You are convinced the futures market will fall 20% by expiry. You are only prepared to buy or sell one futures contract. (i) Will you buy or sell a contract in the futures market? (ii) What is your profit (+) in dollars if you are correct? ( (iii) What is your profit (+)/loss (-) if the futures price on expiry is 4400? (iv) What is your profit (+)/loss (-) if the futures price on expiry is 3700? (v) Explain how a fund manager that is manging $100 million pension fund that track the S&P 500 index who is concerned the spot index will be 3200 on date of expiration of the futures contract in March 2023 can hedge the risk to the pension fund. Explain the net position if on the March expiration the index reads 3000 or 4500.Question 8 The January 2023 S&P 500 cash index is 3950 points while the S&P 500 futures March 2023 index is 4000 and the contract value of each index point is $150. You are convinced the futures market will fall 20% by expiry. You are only prepared to buy or sell one futures contract. (i) Will you buy or sell a contract in the futures market? (ii) What is your profit (+) in dollars if you are correct? ( (iii) What is your profit (+)/loss (-) if the futures price on expiry is 4400? (iv) What is your profit (+)/loss (-) if the futures price on expiry is 3700?Question 1 • Springtime Insurance Brokers Ltd. (SIBL) stock is currently selling for $42. A put option on the stock with a value of $3 has an exercise price of $40 and 6 months until expiration. To prevent arbitrage opportunities, what should be the value of a call option with the same strike price and expiration date? Assume that the options are European and that the effective annual risk-free rate is 6%.
- A Eurodollar futures price changes from 99.45 to 94.32. What is the gain or loss to an investor who is long 5 contracts? Choose the right answer: a. The investor makes gain – 128.25$ b. The investor makes loss – 641.25$ c. The investor makes loss – 195$ d. The investor makes gain – 195.25$ e. The investor makes loss – 128.25$Suppose that you purchase a Treasury bond futures contract at $95 per $100 of face value. What is your obligation when you purchase this futures contract? If an FI purchases this contract, in what kind of hedge is it engaged? Assume that the Treasury bond futures price falls to 94. What is your loss or gain? Assume that the Treasury bond futures price rises to 97. Mark your position to market.which one is correct please confirm? Q16: "If you purchase a $100,000 interest-rate futures contract for 105, and the price of the Treasury securities on the expiration date is 108" your profit is $3000 your loss is $3000 your profit is $8000 your loss is $8000
