Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. the s&p 500 index is currently at 1500. you de

The S&P 500 index is currently at 1500. You decide to enter into 20 S&P...

70.2K

Verified Solution

Question

Finance

image
The S&P 500 index is currently at 1500. You decide to enter into 20 S&P 500 futures contract. Each contract permits delivery of 250 units of the index exactly 3 months from now. The initial margin is 10% of the notional value, and the maintenance margin is 75% of the initial margin. We suppose that you earn a continuously compounded return of 5% on your margin balance. The position is market-to-market on a daily basis. 1) We suppose that one day later, the S&P 500 index increase to 1505 Find the new balance of the margin account. 2) We suppose that one day later, the S&P 500 index drops to 1450 which may require a margin call. Calculate the amount of the margin call (if any)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Identify two (2) pieces of information not included in the principal financial statements that you think...

Finance
Q

Describe how photolithography can be used in the manufacture of semiconductor devices. Include in your answer...

Electrical Engineering
Q

Please read through the article below and answer the question at the end of the article. High-Performing...

Psychology
Q

Google it: According to a report of the Nielsen Company, 81% of internet searches used...

Basic Math
Q

For the functions f x sin x and g x cos x a 4 x...

Algebra
Q

For Mortenson Company, the following information is available: In Mortenson's multiple-step income statement,...

Accounting
Q

Education Tax Credits (LO 7.5) Janie graduates from high school in 2022 and...

Accounting
Q

Why did facebook annual net income decline in 2019? Please provide reasons with clear explanation.

Accounting
Q

Answer the following questions in as much detail as possible. Refer to your class textbook,...

Accounting
Q

Calculate the Kiddie Tax on Childs earned income from dancing classes in New York amounting...

Accounting
Q

The relative distribution of sales among the various products sold by a business is the...

Accounting
Q

Question 3 Ted's Travel Agency provides travel services for walk-in retail clients and for corporate...

Accounting