can someone show me how to solve the following 4 problems 1. Use the following i
ID: 2712439 • Letter: C
Question
can someone show me how to solve the following 4 problems
1. Use the following information to answer the next four questions.
Today's (1/1/2016) settlement price on a yen futures contract is $.008/¥. You believe that the yen will appreciate over the next few days and you decide to use 3 yen futures contracts to trade based on your belief. Each yen futures contracts has 12.5 million yen attached. The initial and maintenance margins are $20,000 and $15,000, respectively. Find your initial margin account balance on the day you open your position (1/1/2016).
45,000
60,000
20,000
15,000
1. Find your ending margin balance on 1/2/2016 if the closing futures price is $.007/¥ on that day. Assume any excesses remain in the account and any deficits are eliminated to keep the account open.
22,500
45,000
97,500
60,000
Find your ending margin balance on 1/3/2016 if the closing futures price is $.0075/¥ that day. Assume any excesses remain in the account and any deficits are eliminated to keep the account open. Do not enter the dollar sign when you input your answer.
___?__
Find your ending margin balance on 1/4/2016 if the closing futures price is $.0072/¥ that day. Assume any excesses remain in the account and any deficits are eliminated to keep the account open. Do not enter the dollar sign when you input your answer.
___?__
45,000
60,000
20,000
15,000
1. Find your ending margin balance on 1/2/2016 if the closing futures price is $.007/¥ on that day. Assume any excesses remain in the account and any deficits are eliminated to keep the account open.
22,500
45,000
97,500
60,000
Find your ending margin balance on 1/3/2016 if the closing futures price is $.0075/¥ that day. Assume any excesses remain in the account and any deficits are eliminated to keep the account open. Do not enter the dollar sign when you input your answer.
___?__
Find your ending margin balance on 1/4/2016 if the closing futures price is $.0072/¥ that day. Assume any excesses remain in the account and any deficits are eliminated to keep the account open. Do not enter the dollar sign when you input your answer.
___?__
Explanation / Answer
Answer (1)
Answer $ 60000
Answer (2)
Ending margin balance $ 22,500
(An amount of $ 22,500 will be deposited to eliminate deficit)
Answer (3)
Ending Margin Account Balance on 1/3/2016 – 63,750
Answer (4)
Ending Margin Account Balance on 1/4/2016 – 52,500
Date - 1/1/2016
Settlement Price of a Yen Futures Contract = $0.008/¥
Amount of Yen attached in each futures contract = 12.5 million Yen
No of contracts purchased = 3
Total Yen Value of futures purchased = ¥ 12.5 Million * 3 = ¥ 37.5 Million
$ Value of the futures contracts = ¥ 37.5 Million * 0.008 = $ 300,000
Initial Margin on each contract = $ 20,000
Maintenance Margin on each contract =$ 15000
Initial Margin account Balance on 1/1/2016 = 3 contracts * $ 20000
= $ 60,000
1/2/2016
Closing Futures Price = $0.008/¥
$ value of futures contracts = ¥ 37.5 Million * 0.007 = $262,500
Change in Dollar Value from Initial position = $262500-$300000 = -$37500
Maintenance Margin to be maintained per contract = $ 15000
Total Maintenance margin = $ 15000 * 3 = $ 45,000
Balance in Margin Account = Initial Balance + Change in Position = $ 60000 + (-$37500)
= $ 22500
Additional amount to be deposited = $45000 - $ 22500 = $ 22500
1/3/2016
Closing Futures Price = $0.0075/¥
Change in $ Value of the contracts = ¥ 37.5 Million * (0.0075-0.007)
= ¥ 37.5 Million * $0.0005 = $18750
Ending Margin Account Balance = 45000 +18750 = 63750
1/4/2016
Closing futures price = $0.0072/¥
Change in $ Value of the contracts = ¥ 37.5 Million * (0.0072-0.0075)
= ¥ 37.5 Million * -$0.0003
= - $ 11,250
Ending Margin Account Balance = 63750 – 11250 = 52500
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