4. On April, a trader sold 10 July sugar futures and purchased 10 September sugar futures, with prices of $5350 per ton and $5400 per ton respectively. On May, the trader hedged and closed all the positions of the contracts, with the closing prices of July and September contracts at $5,390 per ton and $5,480 per ton respectively. The trading unit of sugar futures is 10 tons per contract, excluding commissions and other expenses. The arbitrage trade have (). A. Loss of $2000 B. Profit of $2000 C. Loss of $4000 D. Profit of $4000

4. On April, a trader sold 10 July sugar futures and purchased 10 September sugar futures, with prices of $5350 per ton and $5400 per ton respectively. On May, the trader hedged and closed all the positions of the contracts, with the closing prices of July and September contracts at $5,390 per ton and $5,480 per ton respectively. The trading unit of sugar futures is 10 tons per contract, excluding commissions and other expenses. The arbitrage trade have (). A. Loss of $2000 B. Profit of $2000 C. Loss of $4000 D. Profit of $4000

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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1. Assume a futures price of Php5000 at the start of the transaction, with Php250 initial margin requirement and a Ph150 maintenance margin requirement. The trader takes in a long position of 10 contracts. Marking-to-market process occurs over the period of seven trading days. A. Complete the table above for the holder of the long position. B. When could there be a margin call? C. How much are the total gains or losses by the end of day 7? Futures Beginning Balance Ending Balance Funds Settlement Day Price Gain/Loss Deposited Price Change 5000 4960 2 4800 5050 4 5175 5200 5250.50 5310.75 7 D. Complete the table above for the holder of the short position. Futures Beginning Balance Funds Day Settlement Price Ending Balance Price Gain/Loss Deposited Change 5000 1 4960 4800 5050 4 5175 5200 5250.50 7 5310.75 E. How much are the total gains or losses by the end of day 7?
1. Assume a futures price of Php5000 at the start of the transaction, with Php250 initial margin requirement and a Ph150 maintenance margin requirement. The trader takes in a long position of 10 contracts. Marking- to-market process occurs over the period of seven trading days. A. Complete the table above for the holder of the long position. B. When could there be a margin call? C. How much are the total gains or losses by the end of day 7? Futures Beginning Funds Settlement Ending Day Price Gain/Loss Balance Deposited Price Balance Change 5000 1 4960 2 4800 3 5050 4 5175 5 5200 6 5250.50 7 5310.75 D. Complete the table above for the holder of the short position. Futures Beginning Funds Settlement Ending Day Price Gain/Loss Balance Deposited Price Balance Change 5000 1 4960 2 4800 3 5050 4 5175 5 5200 6 5250.50 7 5310.75 Е. How much are the total gains or losses by the end of day 7?
An investor holds a short position in four July crude palm oil futures contracts. When the contract was entered into on day zero, the futures price was RM 2200 per metric tonne. The initial margin is RM 2750 per contract, and the maintenance margin is RM 1500 per contract. The following table gives information on the price of CPO for July delivery over a 3-day period. Day 1 Closing futures Price (RM) 2150 2300 3 2350 Assess what will the variation margin be on the first day a margin call is received? A. RM 11,000 B. RM 10,000 C. RM 5,000
1. Assume a futures price of Php5000 at the start of the transaction, with Php250 initial margin requirement and a Ph150 maintenance margin requirement. The trader takes in a long position of 10 contracts. Marking-to-market process occurs over the period of seven trading days. A. Complete the table above for the holder of the long position. B. When could there be a margin call? C. How much are the total gains or losses by the end of day 7? Futures Beginning Balance Funds Settlement Ending Balance Day Price Gain/Loss Deposited Price Change 5000 1 4960 2 4800 5050 4 5175 5 5200 6. 5250.50 7 5310.75 D. Complete the table above for the holder of the short position. Futures Beginning Balance Funds Settlement Ending Balance Day Price Gain/Loss Deposited Price Change 5000 4960 1 2 4800 3 5050 4 5175 5200 5250.50 7 5310.75 E. How much are the total gains or losses by the end of day 7?
Assume a futures price of Php5000 at the start of the transaction, with Php250 initial margin requirement and a Ph150 maintenance margin requirement. The trader takes in a short position of 10 contracts. Marking-to-market process occurs over the period of seven trading days. A. Complete the table above for the holder of the long position. B. When could there be a margin call? C. How much are the total gains or losses by the end of day 7?
On 1st of March the crude oil’s spot price is $50 and its August futures price is $48. On 1st of July the spot price is $62 and the August futures price is $63.50. An ABC company entered into futures contracts on 1st of March to hedge its purchase of the commodity on 1st of July. It closed out its position on 1st of July. Which position must be taken to hedge the risk and what is the effective price (after the hedging) paid by the company? Choose the right answer a. No correct answer b. Short, $15.50 c. Long, $46.50 d. Long, $15.50 e. Short, $46.50
Blossom Inc. entered into a futures contract to sell grain for $1,120 in 30 days. This contract helps the company manage its market risk by locking in the amount it will get when it sells the grain. The contracts trade on an exchange and are net settleable. The broker requires a $220 initial margin (normally a percentage of the market value of the contract or a fixed amount multiplied by the number of contracts). This amount is deposited in cash with the broker. Like the forward, the futures contract would have a zero value up front. This is a non-financial derivative because the underlying is a non-financial commodity (grain). Blossom intends to settle on a net basis. Prepare the related journal entry at the acquisition date. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles Debit Credit
Prices of a futures contract for 5 consecutive trading-days are provided in the table below. The initial margin requirement is set at $6.00 per contract and the maintenance margin is $3.60 per contract. Futures Price Day 0 $120 1 $118 2 $117 3 $119 4 $123 $125 5 On day 0, a trader enters into a short position for 15 contracts. The ending balance for the margin account on day 5 is closest to: O a. $15. O b. $210. O C. None of the above. O d. $60.
On a particular day, there were 2, 000 trades in a particular futures contract. This means that there were 2,000 buyers (going long) and 2,000 sellers (going short). Of the 2,000 buyers, 1,400 were closing out positions and 600 wereentering into new positions. Of the 2, 000 sellers, 1, 200 were closing out positions and 800 were entering into newapositions. What is the overall impact of the day's trading on open interest? (please show necessary calculations)
An investor has a short position in 10 futures contracts for which the price increases from $85 to $92 per contract during a trading day. Explain how "marketing to market" will affect the investor's margin account as a result
On Monday morning you sell one June T-bond futures contract at $97,843.75. The contract's face value is $100,000. The initial margin requirement is $2,700, and the maintenance margin requirement is $2,000 per contract. Use the following price data to answer the following questions. Day Settle Monday $ 97,406.25 Tuesday $ 98,000.00 Wednesday $ 100,000.00 After Monday's close the balance on your margin account will be ________.
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.

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