1. ABC Company Ltd purchased 5000 cocoa futures contract at a price of $150 per contract. As part of the contract, ABC was required to deposit $10 per contract initially in their account with the maintenance margin set at $5 per contract. If the price per contract falls to $142 overnight, what action will the exchange require ABC to undertake?
1. ABC Company Ltd purchased 5000 cocoa futures contract at a price of $150 per contract. As part of the contract, ABC was required to deposit $10 per contract initially in their account with the maintenance margin set at $5 per contract. If the price per contract falls to $142 overnight, what action will the exchange require ABC to undertake?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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1. ABC Company Ltd purchased 5000 cocoa futures contract at a price of $150 per contract. As part of the contract, ABC was required to deposit $10 per contract initially in their account with the maintenance margin set at $5 per contract. If the price per contract falls to $142 overnight, what action will the exchange require ABC to undertake?
2. Emmanuella purchased a put option on British pounds for $.06 per unit. The strike price was $1.85, and the spot rate at the time the pound option was exercised was $1.69. Assume there are 31,250 units in a British pound option. What was Emmanuella’s net profit on the option?
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