Investments.

May 31st, 2016
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1. The futures price of corn is \$2.00. The contracts are for 10,000 bushels, so a contract is worth \$20,000. The margin requirement is \$2,000 a contract, and the maintenance margin requirement is \$1,200. A speculator expects the price of the corn to fall and enters into a contract to sell corn. a. How much must the speculator initially remit?

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Investments1JKInstructor Charles BensonInvestmentsJanuary 3, 2016InvestmentsInvestments21. The futures price of corn is \$2.00. The contracts are for 10,000 bushels, so a contract isworth \$20,000. The margin requirement is \$2,000 a contract, and the maintenance marginrequirement is \$1,200. A speculator expects the price of the corn to fall and enters into acontract to sell corn.a. How much must the speculator initially remit?The investor must remit the margin requirement: \$2,000.b. If the futures price rises to \$2.13, what must the speculator do?The contract is currently worth \$2.13 x 10,000 = \$21,300. The speculator has lost \$1,300 and has\$700 margin remaining. This amount is less than the \$1,200 maintenance margin requirement, sothe speculator will have to remit \$1,300 to restore the original \$2,000.c. If the futures price continues to rise to \$2.14, how much does the speculator have in theaccount?If the price continues to increase to \$2.14, the speculator losses an additional \$100 (\$0.01 x10,000). The margin account now has \$1,900 remaining.2.)a) The margin requirement of the contract is \$5,000, so the speculator must remit the amount thatis equal to the margin requirement of \$5,000.b) If the futures price of gold rises to \$1,055, what is the profit and percentage return on yourposition? The speculator would receive \$500 and may withdrawal \$500 from the account sincethe account exceeds the initial margin requirement. The percentage return w

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