Refer to the Mini-S&P contract in Figure 22.1. Assume the closing price for this day.
a. If the margin requirement is 29% of the futures price times the contract multiplier of $50, how much must you deposit with your broker to trade the December maturity contract? (Round your answer to 2 decimal places.)
b. If the December futures price were to increase to 2,091.73, what percentage return would you earn on your net investment if you entered the long side of the contract at the price shown in the figure? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
c. If the December futures price falls by 1%, what is your percentage return? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.)
Homework Answers
Solution :-
(A) Deposit with the broker to trade the December maturity contract
= $2074.10 * 50 * 29% = $30,074.45
(B)
If the December futures price were to increase to 2,091.73, Percentage return =
= ( $2,091.73 - $2,074.10 ) * 50 / $30,074.45
= $881.50 / $30,074.45
= 2.93%
(C) If the December futures price falls by 1%, Percentage return =
= $2,074.10 * 1% * 50 / $30,074.45
= $1037.05 / $30,074.45
= - 0.0345
= - 3.45%
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Refer to the Mini-S&P contract in Figure 22.1. Assume the
closing price for this day.
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