At what contract price will you get a margin call

Assignment Help Financial Management
Reference no: EM13951544

On Friday, December 12, the March 2016 S&P Index futures contract (i.e., the S&P contract which expires in March of next year) closed at 2000, down 40 points on the day. The value of the contract is set at 250 × the index.

a. How much value did each contract lose on Friday? Show your work.

b. You bought the contract during the day on Friday at 2010, and had to put up initial margin of $25,000. The maintenance margin is $12,500. At what contract price will you get a margin call? Explain.

Reference no: EM13951544

Questions Cloud

Response about accrual accounting : Accrual accounting "is an accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur" (Investopedia, 2016)
Theoretical minimum number of stations : An assembly line must be designed to produce 40 containers per hour. The following data in give the necessary information.
What is the face value of a zero coupon bond : What is the face value of a zero coupon bond that has a yield of 8.5%, matures in 6 years, and is currently selling for $404.54? Round your answer to the nearest dollar. Show your work.
Calculate the total gross pay for each employee. : Calculate the total Gross Pay for each employee. Keep in mind that employees are paid time and a half for all over-time hours. Here is an example formula that demonstrates how you would make such a calculation: =b4*d4+b4*c4*1.5 These must be formu..
At what contract price will you get a margin call : On Friday, December 12, the March 2016 S&P Index futures contract (i.e., the S&P contract which expires in March of next year) closed at 2000, down 40 points on the day. The value of the contract is set at 250 × the index. How much value did each con..
What is the expected return on the market : Assume the CAPM holds, and you are given the following values. Expected return on Malware stock = 12% What is the expected return on the market? Show your calculation.
Considering the purchase of bond due to mature : Suppose that an investor is considering the purchase of a bond due to mature in 30 years, carrying an 8 percent coupon rate (coupons are paid semi-annually). This security is available for purchase at a current market price of $975. The bond has a pa..
Net present value and internal rate of return : Calculate the following values for a project that requires an initial investment of $38,370 and has equal annual cash inflows of $10,000 each year for the next 8 years. Assume a cost of capital of 14%.
Prepare the adjusting entries for the month of may : a) Prepare the adjusting entries for the month of May. Use J4 as the page number for your journal. b) Enter the totals from the trial balance as beginning account balances and place a check mark in the posting reference column. Post the adjusting e..

Reviews

Write a Review

Financial Management Questions & Answers

  Firm evaluates all of projects by using npv decision rule

A firm evaluates all of its projects by using the NPV decision rule. At a required return of 12 percent, the NPV for the following project is $ ________ and the firm should accept the project. At a required return of 31 percent, the NPV is $ ________..

  Large amount of bonds and invested proceeds in real estate

Assessing Insurance Company Operations- As a consultant to an insurance company, you have been asked to assess the asset composition of the company. The insurance company has recently sold a large amount of bonds and invested the proceeds in real est..

  Zero estimated salvage value on a straight line basis

Mom's Cookies Inc. is considering the purchase of a new cookie oven. The original cost of the old oven was $30,000; it is now 5 years old, and it has a current market value of $13,333.33. The old oven is being depreciated over a 10­year life towards ..

  About the current health care reform law

The Health care issue is a great topic of debate between people these days. Conduct research about the current Health Care reform law and how it could affect your personal financial plan?

  The inflation-adjusted value of the next interest payment is

Two years ago, an investor purchased a $1,000 par 6% coupon bond that pays interest semi annually. Inflation over the last two years has been 2% per year. the inflation-adjusted value of the next interest payment is ?

  Calculate the market value ratios

Calculate the following market value ratios. Roberts Company had an average of 10,000 shares outstanding during 2012, the net income was $87,000, and the stock price on December 31, 2012 was $41.00. Depreciation Expense was $50,000. Total assets are ..

  Calculate the npv and eac for each machine

Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,102,000 and will last for six years. Variable costs are 40 percent of sales, and fixed costs are $245,000 per year. Calculate the NPV for..

  Discuss pros-cons of capitalizing leases-related assets

One advantage of leasing voiced in the past is that it kept liabilities off the balance sheet, thus making it possible for a firm to obtain more leverage than it otherwise could have. This raised the question of whether or not both the lease obligati..

  Alternative offering prices on the existing price per share

The Newton Company has 125,000 shares of stock that each sell for $70. Suppose the company issues 10,000 shares of new stock at the following prices: $70, $55, and $50. What is the effect of each of the alternative offering prices on the existing pri..

   ay be defined as a measure of uncertainty in set of

1 the value of a financial asset is the .a present value of all of the future cash flows that will be receivedb sum of

  How many dollars will the store need to sell to break-even

Barbarita’s Linens want to expand into the store next door to set up a Baby Supply Store. She needs $150,000 for the build out and new inventory of the project. How much will the expansion of Barbarita’s Baby Supply Store need to sell in dollars and ..

  Explain the concept of return on investment

Explain the concept of return on investment (ROI) and the two differ¬ent approaches to measuring ROI and what is the difference between a lump sum, an annuity, and an un¬equal cash flow stream?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd