The December 2020 Gold Futures contract was priced at $1,500.00 (i.e., F0) per troy ounce on...
The December 2020 Gold Futures contract was priced at $1,500.00 (i.e., F0) per troy ounce on 3/16/2020. Each gold futures contract represents 100 troy ounces. The initial margin requirement (IMR) is $8,000 per contract and the maintenance margin requirement (MMR) is $6,000 per contract.
Jennifer Shaw bought 1 December 2020 Gold futures contract at $1,500.00 on 3/16/2020; Pauline Woo sold 1 December 2020 Gold futures contract at $1,500.00 on 3/16/2020.
Today (3/17/2020), the December 2020 Gold futures contract is priced at $1,494.80.
Questions:
- (5 pts) On 3/16/2020, how much money should Pauline Woo deposit into her margin account?
- (5 pts) On 3/17/2020, who will see an increase in her balance of the margin account?
- (5 pts) On 3/17/2020, will Jennifer Shaw or Pauline Woo receive a margin call?
Homework Answers
A]
Money to deposit = Initial margin requirement = $8,000
B]
Pauline Woo will see an increase in her balance of the margin account. This is because the price of the gold futures contract has declined, and Pauline Woo has sold the contract (short position)
C]
Change in price to receive margin call = (initial margin per contract - maintenance margin per contract) / number of troy ounces per contract
Change in price to receive margin call = ($8,000 - $6,000) / 100
Change in price to receive margin call = $20
The actual change in price of contract = $1,500 - $1,494.80 = $5.20
Therefore, neither of them will receive a margin call
Add Answer to:
The December 2020 Gold Futures contract was priced at
$1,500.00 (i.e., F0) per troy ounce on...
Intro The futures price per troy ounce of gold delivered in 3 months is as follows:...
Intro The futures price per troy ounce of gold delivered in 3 months is as follows: Day Futures price 1,239 1 1,243 1,235 2 1,231 Each contract is for 100 troy ounces. Attempt 2/10 for 10 pts Part 4 If the initial margin requirement is 30%, how much money do you have to put into your brokerage account? No decimals Submit Attempt 4/10 for 10 pts. Part 5 What is the balance in your margin account at the end of...
] Question 4 (10 marks) Suppose the spot price of gold is $1,500 per troy ounce...
]
Question 4 (10 marks) Suppose the spot price of gold is $1,500 per troy ounce today. The futures price of gold for delivery in 1 year is $1,530 per troy ounce. Assume that the one-year gold futures contract is correctly priced and there are no storage and insurance costs. Also assume that the risk-free rate is compounded annually and you can borrow and lend money at the risk-free rate. a). What is the theoretical parity price of a two-year...
18. You sell one December gold futures contract when the futures price is $1,010 per ounce....
18. You sell one December gold futures contract when the futures price is $1,010 per ounce. The contract is on 100 ounces of gold and the initial margin per contract that you provide is $2,000. The maintenance margin per contract is $1,500. During the next day the futures price rises to $1,012 per ounce. What is the balance of your margin account at the end of the day? A. $1,700 B. $2,200 C. $1,300 D. $1,800 19. A hedger takes...
1. Consider the futures contract to buy/sell December gold for $500 per ounce on the New...
1. Consider the futures contract to buy/sell December gold for $500 per ounce on the New York Commodity Exchange (CMX). The contract size is 100 ounces. The initial margin is S3,000, and the maintenance margin is $1,500. 1.a. Suppose that you enter into a long futures contract to buy December for $500 per ounce on the CMX What change in the futures price will lead to a margin call? If you enter a short futures contract, what futures price will...
Suppose that you bought two one-year gold futures contracts when the one-year futures price of gold...
Suppose that you bought two one-year gold futures contracts when the one-year futures price of gold was US$1,340.30 per troy ounce. You then closed the position at the end of the sixth trading day. The initial margin requirement is US$5,940 per contract, and the maintenance margin requirement is US$5,400 per contract. One contract is for 100 troy ounces of gold. The daily prices on the intervening trading days are shown in the following table. Day Settlement Price 0 1340.30 1...
Question 4 (10 marks) Suppose the spot price of gold is $1,500 per troy ounce today....
Question 4 (10 marks) Suppose the spot price of gold is $1,500 per troy ounce today. The futures price of gold for delivery in 1 year is $1,530 per troy ounce. Assume that the one-year gold futures contract is correctly priced and there are no storage and insurance costs. Also assume that the risk-free rate is compounded annually and you can borrow and lend money at the risk-free rate. Part c) is not related to Parts a) – b). c)....
Problem 16 Intro You are long 55 gold futures contracts. Gold: 100 troy oz.; $ per...
Problem 16 Intro You are long 55 gold futures contracts. Gold: 100 troy oz.; $ per troy oz. Open High Low Settle Change 1,400.37 1,401.71 1,399.95 1,400.32 1.98 | Attempt 5/10 for 10 pts. Part 1 What was your profit or loss over the day (in $)? No decimals Previous answers: 275; -275; 776; -2.75 Submit
You are long 20 gold futures contracts, established at an initial settle price of $1,512 per...
You are long 20 gold futures contracts, established at an initial settle price of $1,512 per ounce, where each contract represents 100 troy ounces. Your initial margin to establish the position is $12,000 per contract and the maintenance margin is $11,200 per contract. Over the subsequent four trading days, gold settles at $1,506, $1,502, $1,507, and $1,517, respectively. Compute the balance in your margin account at the end of each of the four trading days, and compute your total profit...
You are long 28 gold futures contracts, established at an initial settle price of $1,536 per...
You are long 28 gold futures contracts, established at an initial settle price of $1,536 per ounce, where each contract represents 100 troy ounces. Your initial margin to establish the position is $12,000 per contract and the maintenance margin is $11,200 per contract. Over the subsequent four trading days, gold settles at $1,525, $1,521, $1,531, and $1,541, respectively Compute the balance in your margin account at the end of each of the four trading days, and compute your total profit...
You are long 19 gold futures contracts, established at an initial settle price of $849 per...
You are long 19 gold futures contracts, established at an initial settle price of $849 per ounce, where each contract represents 100 troy ounces. Your initial margin to establish the position is $12,000 per contract, and the maintenance margin is $11,200 per contract. Over the subsequent four trading days, gold settles at $838, $834, $844, and $854, respectively. Compute the balance in your margin account at the end of each of the four trading days, and compute your total profit...
Intro The futures price per troy ounce of gold delivered in 3 months is as follows: Day Futures price 1,239 1 1,243 1,235 2 1,231 Each contract is for 100 troy ounces. Attempt 2/10 for 10 pts Part 4 If the initial margin requirement is 30%, how much money do you have to put into your brokerage account? No decimals Submit Attempt 4/10 for 10 pts. Part 5 What is the balance in your margin account at the end of...
]
Question 4 (10 marks) Suppose the spot price of gold is $1,500 per troy ounce today. The futures price of gold for delivery in 1 year is $1,530 per troy ounce. Assume that the one-year gold futures contract is correctly priced and there are no storage and insurance costs. Also assume that the risk-free rate is compounded annually and you can borrow and lend money at the risk-free rate. a). What is the theoretical parity price of a two-year...
18. You sell one December gold futures contract when the futures price is $1,010 per ounce. The contract is on 100 ounces of gold and the initial margin per contract that you provide is $2,000. The maintenance margin per contract is $1,500. During the next day the futures price rises to $1,012 per ounce. What is the balance of your margin account at the end of the day? A. $1,700 B. $2,200 C. $1,300 D. $1,800 19. A hedger takes...
1. Consider the futures contract to buy/sell December gold for $500 per ounce on the New York Commodity Exchange (CMX). The contract size is 100 ounces. The initial margin is S3,000, and the maintenance margin is $1,500. 1.a. Suppose that you enter into a long futures contract to buy December for $500 per ounce on the CMX What change in the futures price will lead to a margin call? If you enter a short futures contract, what futures price will...
Question 4 (10 marks) Suppose the spot price of gold is $1,500 per troy ounce today. The futures price of gold for delivery in 1 year is $1,530 per troy ounce. Assume that the one-year gold futures contract is correctly priced and there are no storage and insurance costs. Also assume that the risk-free rate is compounded annually and you can borrow and lend money at the risk-free rate. Part c) is not related to Parts a) – b). c)....
Problem 16 Intro You are long 55 gold futures contracts. Gold: 100 troy oz.; $ per troy oz. Open High Low Settle Change 1,400.37 1,401.71 1,399.95 1,400.32 1.98 | Attempt 5/10 for 10 pts. Part 1 What was your profit or loss over the day (in $)? No decimals Previous answers: 275; -275; 776; -2.75 Submit
You are long 28 gold futures contracts, established at an initial settle price of $1,536 per ounce, where each contract represents 100 troy ounces. Your initial margin to establish the position is $12,000 per contract and the maintenance margin is $11,200 per contract. Over the subsequent four trading days, gold settles at $1,525, $1,521, $1,531, and $1,541, respectively Compute the balance in your margin account at the end of each of the four trading days, and compute your total profit...
You are long 19 gold futures contracts, established at an initial settle price of $849 per ounce, where each contract represents 100 troy ounces. Your initial margin to establish the position is $12,000 per contract, and the maintenance margin is $11,200 per contract. Over the subsequent four trading days, gold settles at $838, $834, $844, and $854, respectively. Compute the balance in your margin account at the end of each of the four trading days, and compute your total profit...
Most questions answered within 3 hours.
-
Calculate the number density of argon gas at a temperature of
24C and a pressure of...
asked 1 hour ago -
Alternative
Classification
How to Estimate
Probabilities from Data? ( For continuous Attributes)
And How to generate...
asked 2 hours ago -
An explosion breaks a 20.0-kg object into three parts. The
object is initially moving at a...
asked 2 hours ago -
Calculate the approximate number of residues of Rubisco, which
is involved in carbon fixation in plants,...
asked 3 hours ago -
Other decisions about scientific claims can have a much broader
impact.ENERGYarrow-10x10.png, environment, health, security - all...
asked 4 hours ago -
I need to write a research paper and work cited about this
topic: The United States...
asked 5 hours ago -
Hello! I was wondering if I could have some help?
If the vapor pressure of carvone...
asked 5 hours ago -
An economist wants to estimate the mean per capita income (in
thousands of dollars) for a...
asked 5 hours ago -
What would be the input/output characteristic of a circuit
obtained by putting two of your 2's-complementers...
asked 5 hours ago -
In Drosophila, the transition from the syncytial blastoderm
stage to the cellular blastoderm stage is a...
asked 6 hours ago -
Project management question:
Name 3 different types of resources (hint: humans are one
type)
asked 6 hours ago -
Consider the following reaction: C 2H 2( g) + 2H 2( g) C 2H 6(
g)...
asked 6 hours ago