Assume today's settlement price on a CME GBP futures contract is $1.4948/£. You have a short position in one contract (with the standardized contract size of £62,500). Your initial performance bond account currently has a balance of $4,000 and the maintenance level is $2,500. The next three days' settlement prices are $1.4908, $1.5088, and $1.5208. Fill out the following table by calculating the changes in the performance bond account from daily marking-to-market and the balance of the performance bond account after the third day. Day Settlement price ($/£) Daily Gain/Loss (5) Account balance (5) 0 1.4948 1 1.4908 2 1.5088 3 1.5208 $4,000 Daily account balance (please fill out ONLY the account balance, not daily profit/loss): Day 1: $4250 Day 2: $ 3.125 Day 3: $750 Total profit/loss: Day 3: $ 750 Total profit/loss: $ -1.625 . (Use negative sign in front of the number for loss) Are you going to have a margin call during the three-day trading period? Answer: Yes (yes/no). If your answer is yes, you will have a margin call on Day 3 playing the game. Answer 1: Correct! 4,250 Correct Answer 4250 Answer 2: Correct! 3,125 Correct Answer 3125 Answer 3: You Answered 750 Correct Answer 2375 Correct Answer 2.375 (insert 1, 2, or 3). If you decide to stay in the market, you need to deposit $ 1,625 in order to continue
Assume today's settlement price on a CME GBP futures contract is $1.4948/£. You have a short position in one contract (with the standardized contract size of £62,500). Your initial performance bond account currently has a balance of $4,000 and the maintenance level is $2,500. The next three days' settlement prices are $1.4908, $1.5088, and $1.5208. Fill out the following table by calculating the changes in the performance bond account from daily marking-to-market and the balance of the performance bond account after the third day. Day Settlement price ($/£) Daily Gain/Loss (5) Account balance (5) 0 1.4948 1 1.4908 2 1.5088 3 1.5208 $4,000 Daily account balance (please fill out ONLY the account balance, not daily profit/loss): Day 1: $4250 Day 2: $ 3.125 Day 3: $750 Total profit/loss: Day 3: $ 750 Total profit/loss: $ -1.625 . (Use negative sign in front of the number for loss) Are you going to have a margin call during the three-day trading period? Answer: Yes (yes/no). If your answer is yes, you will have a margin call on Day 3 playing the game. Answer 1: Correct! 4,250 Correct Answer 4250 Answer 2: Correct! 3,125 Correct Answer 3125 Answer 3: You Answered 750 Correct Answer 2375 Correct Answer 2.375 (insert 1, 2, or 3). If you decide to stay in the market, you need to deposit $ 1,625 in order to continue
Chapter5: Currency Derivatives
Section: Chapter Questions
Problem 3IEE
Related questions
Question
Transcribed Image Text:Assume today's settlement price on a CME GBP futures contract is $1.4948/£. You have a short position in one contract (with the standardized contract size of £62,500). Your initial
performance bond account currently has a balance of $4,000 and the maintenance level is $2,500. The next three days' settlement prices are $1.4908, $1.5088, and $1.5208.
Fill out the following table by calculating the changes in the performance bond account from daily marking-to-market and the balance of the performance bond account after the third
day.
Day
Settlement price ($/£)
Daily Gain/Loss (5)
Account balance (5)
0 1.4948
1 1.4908
2 1.5088
3 1.5208
$4,000
Daily account balance (please fill out ONLY the account balance, not daily profit/loss):
Day 1: $4250
Day 2: $ 3.125
Day 3: $750
Total profit/loss:
Day 3: $ 750
Total profit/loss:
$ -1.625
. (Use negative sign in front of the number for loss)
Are you going to have a margin call during the three-day trading period?
Answer: Yes
(yes/no).
If your answer is yes, you will have a margin call on Day 3
playing the game.
Answer 1:
Correct!
4,250
Correct Answer
4250
Answer 2:
Correct!
3,125
Correct Answer
3125
Answer 3:
You Answered
750
Correct Answer
2375
Correct Answer
2.375
(insert 1, 2, or 3). If you decide to stay in the market, you need to deposit $ 1,625
in order to continue
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