1. Assume a trader opens a new account on the futures exchange on January 18...
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1. Assume a trader opens a new account on the futures exchange on January 18 , and buys a Catastrophe future at $16.50 on the exchange that has the following features: Payoff on the future contract: F(t,T2)=$25,000(E(Lt)); Coverage: Oct 1Dec31; Settlement: Mar 31 next year. The trader closes out the position on 29th January. Assume $270 = initial margin, and $200 maintenance margin a. Complete the followihg Table. b. Is there a margin call on the account? If so, on what date? c. When the trader closes out his position, what is the net gain/loss to the trader? 1. Assume a trader opens a new account on the futures exchange on January 18 , and buys a Catastrophe future at $16.50 on the exchange that has the following features: Payoff on the future contract: F(t,T2)=$25,000(E(Lt)); Coverage: Oct 1Dec31; Settlement: Mar 31 next year. The trader closes out the position on 29th January. Assume $270 = initial margin, and $200 maintenance margin a. Complete the followihg Table. b. Is there a margin call on the account? If so, on what date? c. When the trader closes out his position, what is the net gain/loss to the trader
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