Assume that the mark-to-market settlements take place at


Assume that you wrote 50 futures contract now, with delivery time t=1, and futures price $ 100.

Suppose that the Initial Margin is set at 20% and the Maintenance Margin is set at 10% of the Futures Prices.

Assume that the Mark-To-Market settlements take place at the end of every quarter.

Also , assume all the excess, if any, money from the margin/deposit account is withdrawn immediately .

The subsequent futures prices (delivery time 1) at the end of each quarter is given by: f(0.25, 1) = $ 95; f(0.5, 1) = $ 80; f(0.75, 1) = $ 90.

If the price of the underlying stock is $ 110 at the end of 1 year, then, Show all the step-by-step transactions that take place within the margin account, including the closing of the margin account at the end of the year.

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Assume that the mark-to-market settlements take place at
Reference No:- TGS02370927

Expected delivery within 24 Hours