1. A trader buys a 90-day Eurodollar futures contract at 94.25. The next day, interest rates fall to 4.5% Which of the following is true? Assume that the initial and maintenance margins are $5,000.
The trader would have to deposit an additional $3,125 into her account
The trader could withdraw $3,125 in her account
The trader would have to deposit an additional $1,625 into her account
The trader could withdraw $2,500 from her margin account
The trader could withdraw $1,625 from her margin account
2. A bank estimates that their average balance on demand deposit accounts is $2,000 net float. Each account costs the bank $150 per year in processing costs. The bank collects an average of $7.50 per month on each account in service charges. Assume reserve requirements are 10% If the bank can invest the deposit balance (After adjusting for reserve requirements) at 5%, what is the break-even deposit balance?
$1,000
$2,333
$1,667
$2,000
$1,333