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Ghella [55]
3 years ago
11

A company enters into a short futures contract to sell 25,000 units of a commodity for 950 cents per unit. The initial margin is

$4,500 and the maintenance margin is $3,750. Calculate the futures price per unit that will allow $2,000 to be withdrawn from the margin account.
Business
1 answer:
Ksju [112]3 years ago
8 0

Answer:

$958

Explanation:

The amount that is excess in the initial margin account can be withdrawn. So we calculate the price increase that will result in a $2000 increase in initial margin.

The present price per unit of the commodity is 950 cents for 25,000 units

A unit increase of the price (which is in cents) will be 1/100= 0.01

Therefore an increase in price of 0.01 will lead to gain of 0.01 * 25,000= $250

Let's get price increase that will result in $2,000 gain

$250 = 1 unit price increase

$2,000 = x

x= (2000 * 1) ÷ 250= 8 units increase

Therefore the price at which $2,000 can be withdrawn is 950 + 8= 958 cents

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2 years ago
Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500th unit, and the
dimaraw [331]

Answer:

D : All options are correct

Explanation:

- The marginal buyer is the essence of demand curve while marginal seller is essence of supply curve.

- @ Q = 500 units,    Selling Price is set at SP = $35

- @ Q = 500 units,    Buying Price is set at BP = $40

- Since, SP ≠ BP our equilibrium price would be $ 37.5 assuming the price elasticity of demand and supply are equal. In any case the equilibrium price would lie in between [ 35 , 40 ] such that to prevent a shortage of units in near future.

- Moreover, if the seller decides to sell at price $35 then he must sell goods greater than 500 units to reach the equilibrium profits. However, it could also lead to excess of units or surplus.

- We see that from selling the goods at SP = $35 while the buyer is willing to pay BP = $40 for 500 goods, the seller would be under-profiting and would be earning $5*500 = $2,500 less than he would at equilibrium price of $40 and selling units greater than 500. Hence, 500 goods is not an efficient quantity of goods.

6 0
3 years ago
Alpaca Corporation had revenues of $300,000 in its first year of operations. The company has not collected on $20,000 of its sal
madam [21]

Answer: Option (b) is correct.

Explanation:

Given that,

Revenues = $300,000

Merchandise it purchased = $75,000

Salaries paid = $14,000

Owners invested = $23,000

Borrowed on a five-year note = $23,000

Interest paid = $3,000

Paid for a two-year insurance policy = $6,800

Income tax rate = 9%

Gross Margin = Revenues - Cost of Goods Sold

                       = $300,000 - $75,000

                       = $225,000

Profit before tax = Gross Margin - Salaries - Insurance payment - Interest

                          = $225,000 - 14,000 - 3,400 - 3,000

                          = $204,600

Net Income = Profit before tax - Tax at 9%

                    = $204,600 - 18,414

                    = $186,186

6 0
3 years ago
Assume that the international Fisher effect (IFE) holds between the U.S. and the U.K. The U.S. inflation is expected to be 5%, w
Lesechka [4]

Answer:C. Real interest rates expected by British investors are 2 percentage points higher than the real interest rate expected by US investor.

Explanation:

The real interest rate is the market interest rate less the inflation rate.

The inflation rate always reduce the purchasing power of money which is the real measure of the purchasing power of money and not the money face value.

6 0
3 years ago
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