Ask question

Ask question

All categories

3 years ago

12

Suppose the S&P 500 index is currently 950 and the initial margin is 10%. You wish to enter into 10 S&P 500 futures cont

racts. a. What is the notional value of your position? What is the margin? b. Suppose you earn a continuously compounded rate of 6% on your margin balance, your position is marked to market weekly, and the maintenance margin is 80% of the initial margin. What is the greatest S&P 500 index futures price 1 week from today at which you will receive a margin call?

1 answer:

vagabundo [1.1K]3 years ago

7 0

Answer:

$930.89

Explanation:

The Notional value of position = Price of S&P-500 index future x Contract multiplier x no. of contracts

= 950x250x10

=$2,375,000

Margin = Total nominal value of position x Initial margin

=2375,000x10%

=$237,500

b) Maintenance margin = Initial margin x Maintenance margin

=237500 x 80%

=$190,000

Margin call will be receive when value of the Initial margin falls below maintenance margin

Thus 237500e^0.06/52 + (St -950) x250 x10 <190,000

From here St = price at which margin call will be made

=237500e^0.0011538 + (St -950) x 2500 <190,000

=237500(1.0011538) + (St -950) x 2500 <190,000

=237774.04 + (2500St - 2375000) < 190,000

=2500St - 2137226 <190,000

= 2500St <2327226

St < 930.89

Thus price below $930.89 will be called maintenance margin.

You might be interested in

a security analyst has identified malv/are spreading through the corporate network and has activated the csirt which of the foll

ozzi

A security analyst has identified malware spreading through the corporate network the next thing analyst do is Create help desk tickets to get infected systems reimaged.

<h3>Security analyst :</h3>

He/she works cross-functionally to identify and fix failures in the company's security her systems, solutions, and programs, and recommends specific actions that can improve the company's overall security posture. An Information Security Analyst monitors computer her infrastructure and networks to protect them from threats. Your duties may include maintaining file access and credentials, and finding vulnerabilities in modern systems.

<h3>Malware :</h3>

Malware is software that interferes with a computer, server, client, or computer network, discloses personal information, gains unauthorized access to information or systems, denies access to information, or unknowingly interferes with computer security. and software designed to violate user privacy.

Learn more about security analyst :

brainly.com/question/13179611

#SPJ1

8 0

1 year ago

Which fiscal policy would most likely result in the largest budget deficit

Katena32 [7]

Answer: Low taxation and high spending

6 0

3 years ago

Moss Co. issued $100,000 of five-year, 11% bonds with interest payable semiannually, at a market (effective) interest rate of 8%

leva [86]

The present value of the bond payable is $120,130.

<h3>What is the present value?</h3>

The present value of the bond is the sum of the the bonds discounted cash flows.

Present value can be calculated using a financial calculator:

Cash flow each year from period 1 to 10 : 11% x 100,000 = 11,000
Cash flow in period 20 : 100,000
Interest rate = 8%

Present value = $120,130.24

To learn more about present value, please check: brainly.com/question/26537392

#SPJ1

7 0

1 year ago

Your business has purchased 500 pizza pans, 60 kg of sauce, 100 kg of cheese, 2.5 kg of basil, 2.5 kg of oregano, 5 kg of yeast,

adelina 88 [10]

Answer:

400 pizzas

Explanation:

The complete question would be:

<em>You are going into the business of making pizzas. The following is the list of ingredients to make ONE pizza: </em>

<em>400 g flour 50 mL water </em>

<em>10 g yeast 120 g sauce </em>

<em>250 g cheese 5 g oregano </em>

<em>5 g basil </em>

<em>Your business has purchased 500 pizza pans, 60 kg of sauce, 100 kg of cheese, 2.5 kg of basil, 2.5 kg of oregano, 5 kg of yeast, and 200 kg of flour. You have as much water as you need. How many pizzas can you make? </em>

You are going to have to make a couple of conversions to do this. Since everything you need is indicated in grams, we first need to convert everything you have in grams.

There are 1,000 g in 1 kg. So now we convert them all:

60 kg of sauce

$60kg \times \dfrac{1,000g}{1kg} = 60,000g$

100 kg of cheese

$100kg \times \dfrac{1,000g}{1kg} = 100,000g$

2.5 kg of basil

$2.5kg \times \dfrac{1,000g}{1kg} = 2,500g$

2.5 kg of oregano

$2.5kg \times \dfrac{1,000g}{1kg} = 2,500g$

5 kg of yeast

$5kg \times \dfrac{1,000g}{1kg} = 5,000g$

200 kg of flour

$200kg \times \dfrac{1,000g}{1kg} = 200,000g$

So now that we know what we have, we determine how many pizzas we can make with the amount of each ingredient. We get the ratio of each ingredient to one pizza to determine how many we can make:

<u>Flour:</u>

Available: 200,000g

Needed: 400g

$200,000g\ of\ flour\times\dfrac{1\ pizza}{400g\ of\ flour} = 500\ pizzas$

<u>Yeast:</u>

Available: 5,000g

Needed: 10g

$5,000g\ of\ yeast\times\dfrac{1\ pizza}{10g\ of\ yeast} = 500\ pizzas$

<u>Cheese:</u>

Available: 100,000g

Needed: 250g

$100,000g\ of\ cheese\times\dfrac{1\ pizza}{250g\ of\ cheese} = 400\ pizzas$

<u>Basil:</u>

Available: 2,500g

Needed: 5g

<u /> $2,500g\ of\ basil\times\dfrac{1\ pizza}{5g\ of\ yeast} = 500\ pizzas$ <u />

<u>Sauce:</u>

Available: 60,000g

Needed: 120g

<u /> $60,000g\ of\ sauce\times\dfrac{1\ pizza}{120g\ of\ sauce} = 500\ pizzas$ <u />

<u>Oregano:</u>

Available: 2,500g

Needed: 5g

<u /> $2,500g\ of\ oregano\times\dfrac{1\ pizza}{5g\ of\ oregano} = 500\ pizzas$ <u />

We do not need to consider water, because it will provide as many as we will need.

So here we see that all but one ingredient is able to yield 500 pizzas. Cheese is the only one that yields less than 500, specifically 400 only. This is your limiting ingredient and this ingredient determines how many pizzas you can make. Because when you run out of cheese, you can no longer make a pizza.

4 0

3 years ago

A diesel-powered tractor with a cost of $186,240 and estimated residual value of $5,700 is expected to have a useful operating l

scoundrel [369]

Answer:

$612

Explanation:

To compute the depreciation, first we have to compute the depreciation per hour which is given below:

= (Cost of diesel-powered tractor - estimated residual value) ÷ (useful operating life)

= ($186,240 - $5,700) ÷ (59,000 hours)

= ($180,540) ÷ (59,000 hours)

= $3.06 per hour

Now the depreciation would be

= Operated hours × depreciation per hour

= 200 units × $3.06

= $612

7 0

3 years ago