You take a short position in 3 futures contracts on WIG20 on the Warsaw Stock Exchange. The current contract price is 2023. The maintenance margin is 6.5% of the contract value and the initial margin is 15% higher than the maintenance margin. What amount do you need to deposit in the margin account when you take the position? Remember the correct multiplier for these contracts on the WSE. a) 3024.38 PLN. b) 453.66 PLN. c) 4536.58 PLN. d) 9073.15 PLN.
Q: I borrowed $3650 from a bank for 8 months. The bank discounted the loan at 7.5%. How much interest…
A: We need to use simple interest formula below to calculate interest or discount on loan.Simple…
Q: Question 3 Assuming the projects below are all mutually exclusive, which one would you recommend…
A: NPV is the present value of all future cash flows minus the initial investment of the project. This…
Q: What graphs/equations expalin how a firms operating leverage affects its beta?
A: Operating leverage refers to the extent to which a firm uses fixed costs in its operations, while…
Q: Calculate the price weighted index value for 31 Dec 2020, prior to the splits. Shares W and X had 2…
A: A price-weighted index is a index in which the components are weighted based on their individual…
Q: correct answer is 7,182 no tables, only formulas, please An investor undertakes a 12-year project…
A: The internal rate of return (IRR) statistic provides a reasonable estimate of the annualized rate of…
Q: Suppose that you have inherited an annuity with the parameters given below. What is the present…
A: An annuity refers to a long-term investment contract between a person and an insurance company in…
Q: An investor is looking to invest R 250,000 with the intent of getting the highest possible return.…
A: The first step in solving a linear programming problem of maximizing returns is to assume certain…
Q: A $150,000 issue of five-year bonds redeemable at par offers 6.09% coupons payable monthly. What is…
A: Bonds are a kind of loan in which only interest is paid each period but face amount is paid on the…
Q: : Which of the following investment accounts will have exactly tripled alue after a year has passed?…
A: Investors can evaluate the probable long-term growth of an investment using the future value.…
Q: atoil the national oil company of Norway, is a large, sophisticated, and active participant in…
A: The CIA profit potential is
Q: The upper and lower bounds on option prices must be satisfied irrespective of the underlying price…
A: Options are financial instruments that provide investors with the right but not the obligation to…
Q: Find the selling price of an item which has a cost price of $15.61 and is sold at a loss of 371/2 %…
A: Hi studentSince there are multiple questions, we will answer only first question.Profit or loss is…
Q: Barbara Millicent Roberts LLC (BMRL) is a boutique advisory firm that specialises in macro- economic…
A: The CAPM model refers to the relationship that exists between the expected return of the stock and…
Q: AMXL price is at 16.20, AMXL is expected to pay a dividend of 16 cents in 30 days and pay a dividend…
A: Forward price refers to the agreed-upon price at which a specific financial instrument, such as a…
Q: uppose a stock had an initial price of $105 per share, paid a dividend of $2.50 per share during the…
A: The concept of "percentage total return" is a financial metric used to evaluate the overall…
Q: Present 5 points each for the following: - 1. Benefits of Takaful Operations in Malaysia 2. Issues…
A: Benefits of Takaful Operations in Malaysia are as follows:Islamic Principles Compliance: Takaful…
Q: you made an investment 10,000 which continuously increases by a quarter each year. How much is the…
A: The most significant and carefully scrutinized statistic in a company's financial records is its…
Q: Compute the profit from triangular 30yen/euro, 140yen/euro, and for or US$ and yen are 100yen/US$, a…
A: Arbitrage profit means sale or purchase of currency in such a way that profit is generated without…
Q: Given the following end of year cash flows what is the IRR of this project? Also assume that…
A: IRR of project is computed by following formula:-IRR = Lower rate + NPV means Net present value.NPV…
Q: Consider a hedge fund specializing in arbitrage strategies involving dual-listed companies and…
A: A hedge fund is a specialized investment fund that pools capital from accredited investors or…
Q: Continuing on from the previous question assume the rate of interest is 12%. 18) What's the present…
A: Cost of energy efficient refrigerator = $1723No of years = 10 yearsSavings in Energy = $40NPV is the…
Q: Question A .Most adults have an annual financial cycle that drives our home lives and needs.…
A: An "annual financial cycle" refers to the recurring financial activities and commitments that…
Q: In terms of the stock valuation as indicated by the Cyclically Adjusted Price-Earnings Ratio (CAPE),…
A: The Cyclically Adjusted Price-Earnings Ratio (CAPE), often referred to as the Shiller P/E after…
Q: A company that manufactures amplified pressure transducers wishes to decide between the machines…
A: Incremental Rate of Return (ROR) is a financial metric used to evaluate the profitability of an…
Q: Please no written by hand and no emage Situation 6-2 The current 1-year, 2-year, and 3-year bond…
A: Expectations theory assumes there is no chance for arbitrage, suggesting that two investment…
Q: ABC steel plant industry plans to manufacture a product. The product needs a special component. The…
A: Capital budgeting is the process by which a company evaluates and selects long-term investment…
Q: An investor owns an ETF (Exchange Traded Fund) tracking the ASX 200 index as part of his portfolio,…
A: Dividend yield = 2%Spot price of ETF = $50 per unitSelling price per unit = $49Borrowing rate =…
Q: A currency swap has a remaining life of 15 months. It involves exchanging interest at 10% on £20…
A: Currency swaps:A currency swap is an arrangement wherein involved sides swap the principle and…
Q: Required Lump-Sum Payment To complete your last year in business school and then go through law…
A: Present Value of Annuity: It is the present worth of the future annuity payments made at the end of…
Q: We have 50 years of annual data on (detrended) ex post prices P∗ t and on (detrended) actual stock…
A: The sample variances of detrended ex post prices (P∗t) and actual stock prices (Pt) provide valuable…
Q: Suppose that you have inherited an annuity that will initially pay $1,755 six years from now. Each…
A: PMT=$1755growth rate (g)= 3%cost of capital =7% NPER (n) (for payments)= 30
Q: ds and consider stock X, which has a return variance of 0.09 and a correlation of 0.75 with the…
A: Assume the CAPM holds and consider stock X, which has return variance of 0.09 and correlation of…
Q: Skis are listed by a manufacturer for $860, less trade discounts of 35% and 17%. What further rate…
A: This is a case of three successive discounts.Successive discounts means discount on the discount.We…
Q: Question Content Area Present value of $1 Periods 6% 8% 10% 12% 14% 16% 1 0.94340 0.92593 0.90909…
A: Layton Company can compare the present value of the future cash flows of each project to their…
Q: The present value of $121,000 expected one year from today at an interest rate (discount rate) of 10…
A: Present Value (PV) is a financial concept that represents the current worth or value of a sum of…
Q: A loan of $9000.00 was repaid together with interest of $3728.00. i 9.4% compounded quarterly, how…
A: Future value of money includes the amount of the initial loan or deposit plus compounded interest…
Q: Marginal cost-benefit analysis and the goal of the firm Ken Allen, capital budgeting analyst for…
A: Marginal cost-benefit analysis is an examination of additional benefits generated from the…
Q: What make ROE(return on equity) of a company decrease further into negatives even though their…
A: Return on Equity (ROE) is a financial metric that gives investors an idea of how well a company is…
Q: Assuming a cost of capital of 5% and that $60,000 is the correct profit estimate each year for the…
A: Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment or…
Q: Your uncle passed away and left you $10 million with the stipulation that it be invested in real…
A: Ira Our's investment proposal may seem enticing at first glance, promising a quick profit and a high…
Q: Fleming Golf has decided to sell a new line of golf clubs. The clubs will sell for $900 per set and…
A: Selling Price $ 900.00Variable cost $ 675.00No of unit…
Q: One reason interest rate swaps exist is that: interest rates are lower because it is easy to fool…
A: An interest rate swap is a financial derivative contract between two parties that involves the…
Q: For arbitrage strategies involving multiple share classes of ordinary stocks, which of the following…
A: Arbitrage strategies involve exploiting price discrepancies or inefficiencies in financial markets…
Q: Consider the following $1,000 par value zero-coupon bonds: Years until Yield to Bond Maturity…
A:
Q: A 3-month $26,000 treasury bill with a simple annual discount rate of 0.24% was sold in 2016. Assur…
A: Treasury bills are short-term money market instruments used by the federal bank for short-term…
Q: L'Oreal (bank account at Alpha Bank) issues $60,000 face value bonds for the price of $56,000; the…
A: Bonds are financial instruments that represent a form of debt issued by governments, municipalities,…
Q: You have at hand the historical monthly excess returns of Strategy X over 12 months. In additic you…
A: Alpha is a determination to determine the excess return from the intrinsic return we get from…
Q: Consider an investment whose annual return is normally distributed with a mean of 6% and a standard…
A: A typical risk management metric in the banking sector is value at risk, or VAR. Value at Risk is a…
Q: The following table contains a summary of how a project's balance is expected to change over its 5…
A: Net present value is a method of capital budgeting used to determine the worth of a project in…
Step by step
Solved in 3 steps with 2 images
- A trader takes a view that March KLSE CI futures which are currently trading at 1188.60 are about to enter a downtrend. Should the trader go long or short futures. Assuming the trader maintains their original position until expiry and the cash settlement price is 1185.40, what will be the profit or loss? The contract size is RM50 per contract.Suppose that, on 5 November 2020, you opened a short position in a two-year futures contract on the Tesla stock. The share price at the beginning of the contract was $146, and the initial futures price was equal to a theoretical two-year forward price. Assume the following: initial margin of 40% of the futures value, maintenance margin of 32% of the futures value, 3% flat interest rate, continuous compounding, no withdrawals of the excess margin. Next, suppose that, on 1 November 2022, the Tesla stock is priced at $228 per share, and it goes down by 1% daily over 2nd, 3rd and 4th November. Suppose further that, on 1 November 2022, you have received a margin call from your broker (this was your first margin call during this contract) and had to make an instant adjustment to your margin account. Your position in this contract is closed on 4 November 2022. How can you assess your overall profit or loss? Would your overall profit/loss from 1) change if, on 5 November 2020, you had…Suppose that, on 5 November 2020, you opened a short position in a two-year futures contract on the Tesla stock. The share price at the beginning of the contract was $146, and the initial futures price was equal to a theoretical two-year forward price. Assume the following: initial margin of 40% of the futures value, maintenance margin of 32% of the futures value, 3% flat interest rate, continuous compounding, no withdrawals of the excess margin. Next, suppose that, on 1 November 2022, the Tesla stock is priced at $228 per share, and it goes down by 1% daily over 2nd, 3rd and 4th November. Suppose further that, on 1 November 2022, you have received a margin call from your broker (this was your first margin call during this contract) and had to make an instant adjustment to your margin account. Calculate the value of your position in this contract at a close of each day between 1-4 November 2022. Show and explain each step of your derivations.
- Suppose that, on 5 November 2020, you opened a short position in a two-year futures contract on the Tesla stock. The share price at the beginning of the contract was $146, and the initial futures price was equal to a theoretical two-year forward price. Assume the following: initial margin of 40% of the futures value, maintenance margin of 32% of the futures value, 3% flat interest rate, continuous compounding, no withdrawals of the excess margin. Next, suppose that, on 1 November 2022, the Tesla stock is priced at $228 per share, and it goes down by 1% daily over 2nd, 3rd and 4th November. Suppose further that, on 1 November 2022, you have received a margin call from your broker (this was your first margin call during this contract) and had to make an instant adjustment to your margin account. Show how the balance on your margin account was changing over this period (i.e., 1-4 November 2022).(a) Suppose a trader takes a position on June 5th 2021, in one September 2021 EURO (EUR) future contract at USD1.3094/EUR. The trader holds the position until the last day of trading when the spot price is USD1.2939/EUR. This will be the final settlement price because of price convergence. The trader has EUR125,000 for this investment. (i) If the trader had a long position and he was a speculator, calculate his profit or loss for the position above. (ii) If the trader had a short position and he was a speculator, calculate his profit or loss for the position above. (iii) If the trader had a long position and he was a hedger, calculate his profit or loss for the position above. (iv) If the trader had a short position and he was a hedger, calculate his profit or loss for the position above. (b) Discuss factors that you would consider in evaluating the political risk associated before making FDI in a foreign country.The Mexican peso futures contract is trading at 0.07713 $/MXN. Contract size for the Mexican peso future is 500,000 pesos. You believe the spot price will be 0.08365 $/MXN at expiration. What speculative position would you enter into to profit from your beliefs? Calculate your anticipated profits assuming you take a position in three contracts. What is the size of your profit or loss if the futures price is indeed an unbiased predictor of the future spot price and this price materializes? Do problem 1 again assuming you believe the spot price will be 0.07061 $/MXN.
- June 2021 Mexican peso futures contract has a price of $0.05197 per MXN. You believe the spot price in June will be $0.05831 per MXN. MXN500,000 is the contract size of one MXN contract. Required: What speculative position would you enter into to attempt to profit from your beliefs? Calculate your anticipated profits, assuming you take a position in three contracts. What is the size of your profit (loss) if the futures price is indeed an unbiased predictor of the future spot price and this price materializes?You placed $120,000 in your future trading account have just bought your first HSI June 2023 futures contract today @ 19,652, at market close the HSI June 2023 future closed at 19,534. Currently the initial margin for HSI is $101,944, the maintenance margin is $81,555. HSI futures is $50 per index point. What is you margin account balance as of market closed today? Please write out the detailed calculation stepsAssume that today the euro futures contracts with a September 15th delivery date are priced at $1.3680/€ . Suppose that you sold 15 contracts of the euro futures today. If, by September 15th the spot rate is $1.3260/€ , your total profit/loss on your position is (the euro futures contract size is €125,000). $78,750 loss $78,750 gain €78,750 loss €5,250 loss None of the abov
- Refer to the Mini-S&P contract in Figure 22.1. Assume the closing price for this day.a. If the margin requirement is 23% of the futures price times the contract multiplier of $50, how much must you deposit with your broker to trade the March maturity contract? (Round your answer to the nearest whole dollar.)Required margin depositb. If the March futures price increases to 2594.70, what percentage return will you earn on your investment if you entered the long side of the contract at the price shown in the figure? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Percentage return on net investment%c. If the March futures price falls by 1%, what is your percentage return? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)Percentage return on net investment%A speculator enters a futures contract for September delivery (September 19) of £62,500 on February 2. The futures exchange rate is $1.650 per pound. He believes that the spot rate for pounds on September 19 will be $1.700 per pound. The margin requirement is 2 percent. (a) If his expectations are correct, what would be his rate of return on the investment? (b) If the spot rate for pounds on September 19 is 5 percent lower than the futures exchange rate, how much would he lose on the futures speculation? (c) If there is a 65 percent chance that the spot rate for pounds will increase to $1.700 by September 19, would you speculate in the futures market?Using the quotations in Exhibit 7.3, note that the September 2016 Mexican peso futures contract has a price of $0.05481 per MXN. You believe the spot price in September will be $0.064 per MXN. Calculate your anticipated profits (or loss) measured in $ (keep one decimal), assuming you take a long position in three contracts (Note that the contract size of one MXN contract is MXN500,000 ). When you enter a positive number, it means a profit. If you enter a negative number, it means a loss. Additionally, please keep one decimal, eg., 1,500.4. There is no need to use currency symbol in this question since your balance is measured in US $.