Future price of Brandex stock if they sell at $120 per share and the T-bill rate is 6% per year. Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

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Answer 1

Question

Chapter 22, Problem 13PS

A

Summary Introduction

To explain: Future price of Brandex stock if they sell at $120 per share and the T-bill rate is 6% per year.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

B

Summary Introduction

To explain: Change in the future price and investor’s margin if future price drops by certain value.

Introduction: Future contract is conformity between purchaser and retailer to purchase the commodities, bonds and stocks in prearranged date at a definite price.

C

Summary Introduction

To explain: Return percentage of investor’s position when the margin of the contract is $12000.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

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Students have asked these similar questions

FinTrade has just introduced a single-stock futures contract on Brandex stock, a company that currently pays no dividends. Each contract calls for delivery of 800 shares of stock in one year. The T-bill rate is 8% per year. Required: If Brandex stock now sells at $180 per share, what should the futures price be? If the Brandex price drops by 6%, what will be the change in the futures price and the change in the investor’s margin account? If the margin on the contract is $13,900, what is the percentage return on the investor’s position?

Suppose you decided to enter into a futures contract involving a stock that sells for Php888.75 per share and you purchased 1,000 shares of this stock. The initial margin requirement is 25% of the price and the maintenance margin requirement per contract is 20% of the stock price. Assume that you went 5 long contracts. (Show complete solution for each item.) A. How much would you have to pay in initial margin? B. How much is the maintenance margin requirement value? C. What is the price of the stock when maintenance margin will be hit? Interpret the result.

Nanno Company offers its investors option contracts to buy their shares at a price of P50. Currently, the value of their stocks in the market stands at P60. The 52-week high of the share price is P83 and its 52-week low is P47. The treasury bill issued by the government yields 8.25% currently. REQUIRED: What’s the probability for the up move? What’s the probability for the down move? How much is the total option pay off for the stock? What should be the reasonable price of the option contracts of the company?

Answer 2

Question

Chapter 22, Problem 13PS

A

Summary Introduction

To explain: Future price of Brandex stock if they sell at $120 per share and the T-bill rate is 6% per year.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

B

Summary Introduction

To explain: Change in the future price and investor’s margin if future price drops by certain value.

Introduction: Future contract is conformity between purchaser and retailer to purchase the commodities, bonds and stocks in prearranged date at a definite price.

C

Summary Introduction

To explain: Return percentage of investor’s position when the margin of the contract is $12000.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

Expert Solution & Answer

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Answer 3

Question

Chapter 22, Problem 13PS

A

Summary Introduction

To explain: Future price of Brandex stock if they sell at $120 per share and the T-bill rate is 6% per year.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

B

Summary Introduction

To explain: Change in the future price and investor’s margin if future price drops by certain value.

Introduction: Future contract is conformity between purchaser and retailer to purchase the commodities, bonds and stocks in prearranged date at a definite price.

C

Summary Introduction

To explain: Return percentage of investor’s position when the margin of the contract is $12000.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

Expert Solution & Answer

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See solution

Answer 4

Question

Chapter 22, Problem 13PS

A

Summary Introduction

To explain: Future price of Brandex stock if they sell at $120 per share and the T-bill rate is 6% per year.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

B

Summary Introduction

To explain: Change in the future price and investor’s margin if future price drops by certain value.

Introduction: Future contract is conformity between purchaser and retailer to purchase the commodities, bonds and stocks in prearranged date at a definite price.

C

Summary Introduction

To explain: Return percentage of investor’s position when the margin of the contract is $12000.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

Expert Solution & Answer

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Answer 5

Chapter 22, Problem 13PS

A

Summary Introduction

To explain: Future price of Brandex stock if they sell at $120 per share and the T-bill rate is 6% per year.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

B

Summary Introduction

To explain: Change in the future price and investor’s margin if future price drops by certain value.

Introduction: Future contract is conformity between purchaser and retailer to purchase the commodities, bonds and stocks in prearranged date at a definite price.

C

Summary Introduction

To explain: Return percentage of investor’s position when the margin of the contract is $12000.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

Answer 6

Chapter 22, Problem 13PS

A

Summary Introduction

To explain: Future price of Brandex stock if they sell at $120 per share and the T-bill rate is 6% per year.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

Answer 7

Chapter 22, Problem 13PS

A

Summary Introduction

To explain: Future price of Brandex stock if they sell at $120 per share and the T-bill rate is 6% per year.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

Answer 8

B

Summary Introduction

To explain: Change in the future price and investor’s margin if future price drops by certain value.

Introduction: Future contract is conformity between purchaser and retailer to purchase the commodities, bonds and stocks in prearranged date at a definite price.

Answer 9

B

Summary Introduction

To explain: Change in the future price and investor’s margin if future price drops by certain value.

Introduction: Future contract is conformity between purchaser and retailer to purchase the commodities, bonds and stocks in prearranged date at a definite price.

Answer 10

C

Summary Introduction

To explain: Return percentage of investor’s position when the margin of the contract is $12000.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

Answer 11

C

Summary Introduction

To explain: Return percentage of investor’s position when the margin of the contract is $12000.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 22 - Prob. 1PS Ch. 22 - Prob. 2PS Ch. 22 - Prob. 3PS Ch. 22 - Prob. 4PS Ch. 22 - Prob. 5PS Ch. 22 - Prob. 6PS Ch. 22 - Prob. 7PS Ch. 22 - Prob. 8PS Ch. 22 - Prob. 9PS Ch. 22 - Prob. 10PS

Future price of Brandex stock if they sell at $120 per share and the T-bill rate is 6% per year. Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

Solution Summary: The author explains the future price of Brandex stock if they sell at 120 per share and the T-bill rate is 6% per year.

To explain: Future price of Brandex stock if they sell at $120 per share and the T-bill rate is 6% per year.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

To explain: Change in the future price and investor’s margin if future price drops by certain value.

Introduction: Future contract is conformity between purchaser and retailer to purchase the commodities, bonds and stocks in prearranged date at a definite price.

To explain: Return percentage of investor’s position when the margin of the contract is $12000.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

Want to see the full answer?

Chapter 22 Solutions

Future price of Brandex stock if they sell at $120 per share and the T-bill rate is 6% per year. Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

Solution Summary: The author explains the future price of Brandex stock if they sell at 120 per share and the T-bill rate is 6% per year.

To explain: Future price of Brandex stock if they sell at $120 per share and the T-bill rate is 6% per year. Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

To explain: Change in the future price and investor’s margin if future price drops by certain value. Introduction: Future contract is conformity between purchaser and retailer to purchase the commodities, bonds and stocks in prearranged date at a definite price.

To explain: Return percentage of investor’s position when the margin of the contract is $12000. Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

Want to see the full answer?

Chapter 22 Solutions

To explain: Future price of Brandex stock if they sell at $120 per share and the T-bill rate is 6% per year.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.

To explain: Change in the future price and investor’s margin if future price drops by certain value.

Introduction: Future contract is conformity between purchaser and retailer to purchase the commodities, bonds and stocks in prearranged date at a definite price.

To explain: Return percentage of investor’s position when the margin of the contract is $12000.

Introduction: Future contract is an agreement between buyer and seller to purchase the commodities, bonds and stocks in predetermined date at a defined price.