A steel manufacturer has bought 100,000 futures contracts with maturity in 4 years with rollover every 6 months. This manufacturer is exposed to liquidity risk if O a. Futures prices decrease significantly for a long period. O b. There is no correct answer. Oc. The seller closes out the position before the expiry. Od. There is no margin call for the seller. Oe. There is a margin call for the seller.
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- suppose you buy an non-dividend paying asset at $50 and sell a 6 month futures contract at $53. What is your profit or lost at expiration if the asset price down to $47? current 6 month interest is 0.25% p.a. (Ignore carrying costs and transaction cost)? What happens to the basis through the contract's life? a.none of the above b.it initially decreases, then increases c.it initially increases, then decreases d.it moves toward zero at expiry e.it remains relatively steadyA Forwand contracts have no defalt risk B Futures contracts roquire an initial margin requirement be paid. c Forward contracts are markod to market daily- D. Forward contract buyers and sellers do not know who the counterparty iS E. Fuures contracts are caly traded over the counter 18. You have agreed to deliver the underlying conmmodity on a futures contract in 90 days. Today the underlying commodity peice rises and you get a margin call. You must have A. a long position in a fatures contract B. a short position in a futures contract C. sold a forward contract D. purchased a forward contract E purchased a call option on a futures contract 19. You have taken a stock option position and, if the stock's price drops, you will get a level gain no matter how far prices fall, but you could go bankrupt if the stock's price rises. You have2.27. Trader A enters into futures contracts to buy 1 million euros for 1.1 million dollars inthree months. Trader B enters in a forward contract to do the same thing. The exchangerate (dollars per euro) declines sharply during the first two months and then increases forthe third month to close at 1.1300. Ignoring daily settlement, what is the total profit ofeach trader? When the impact of daily settlement is taken into account, which trader hasdone better?
- Consider a hypothetical futures contract where the current price is $ 212. The initial margin requirement is $ 10 and the maintenance margin requirement is $ 8. You enter into long 20 contracts and meet all margin requirements, but do not withdraw any excess margin. B. Complete the table below and explain all deposited funds. Suppose the contract was purchased at the settlement price of that day, so there is no gain or loss at current market prices on the day of purchase. C. What is your total profit or loss by the end of Day 6?You buy a 25, 000 pound copper futures contract at $3.1165 per pound with an initial margin requirement of $5000, and maintenance margin of $3000. What is your percent returmuf instead copper decreased to $3.06597-25%-5%-2% -0,2% 2 Speculators in futures markets provide liquidity which raises transaction costs lowers transaction costs, increases excess volaillity causes panics and crashes.Suppose a oil producer wants to hedge against possible price fluctuations in the market. For example, in November, he decides to enter into a short-sell position in a 2 (two) futures contracts in order to limit his exposure to a possible decline in the cash price prior to the time when he will sell his oil in the cash market. Assume that the spot price of oil is $30 and the futures price for a March futures contract is $45. What is the basis? Выберите один ответ: a. 30 b. 7.5 c. 25 d. 15 e. 45
- Suppose the quoted futures price for delivery in 1 year is $7.10. The current underlying price is $7 and the continuously compounded interest rate is 5%. The underlying does not pay dividends. How could you make a riskless arbitrage profit? Question 2Answer a. buy futures contracts, short sell the stock and invest in a bank account b. borrow from the bank to buy futures contracts and short sell the stock c. sell futures contracts, borrow and buy the stock d. sell future contacts, short sell the stock and invest in a bank accountAssume a trader who has no existing CPO positions is bullish on CPO spot and futures pricing over the next three months. He feels CPO prices will rise, and he wants to benefit from his prediction. He points out that the 3-month CPO futures with a 90-day maturity are now trading at $980/ton. 1. Calculate the profit/loss if the CPO price is $1,176.00 in 90 days (at futures maturity). 2. Calculate the profit/loss if the CPO price drops 20% to $784 in 90 days.A particular stock does not pay dividends and is currently priced at $12. Suppose that the quoted futures price for delivery in 1 year is $12.45. The continuously compounded interest rate is 2%. The underlying does not pay dividends and there are no costs of trading. How could you make a riskless arbitrage profit? a. There is no way to make a risk-less profit in this scenario. b. Today you buy futures, short sell the stock and invest the receipts from the short sale c. Today you buy futures, borrow money and purchase the stock. d. Today you sell futures, borrow money and purchase the stock.
- A particular stock does not pay dividends and is currently priced at $12. Suppose that the quoted futures price for delivery in 1 year is $12.45. The continuously compounded interest rate is 5%. The underlying does not pay dividends and there are no costs of trading. How could you make a riskless arbitrage profit? a. Today you buy futures, short sell the stock and invest the receipts from the short sale b. Today you buy futures, borrow money and purchase the stock. c. There is no way to make a risk-less profit in this scenario. d. Today you sell futures, borrow money and purchase the stock.Suppose an investor sells 100 stocks by short selling for 6 months, the stock price is 30 yuan, and the annual interest rate of 6 months is fixed at 3%. How can I use forward contracts to avoid risks? What is the execution price? Please analyze if the stock price rises to 35 yuan or falls to 25 yuan after 6 months of hedging, what are the losses of this investor?Give typing answer with explanation and conclusion An investor has a $1 million long position in T-bond futures. The investor’s broker requires a maintenance margin of 4.25%. Next day the value of the futures contracts drops by $30,000 to $970,000. By what amount he will receive a margin call? $28,725 $45,000 $30,000 $28,650 NOT ENOUGH DATA TO ANSWER $43,650