What is the break-even deposit balance

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Reference no: EM131935784

1. A trader buys a 90-day Eurodollar futures contract at 94.25. The next day, interest rates fall to 4.5% Which of the following is true? Assume that the initial and maintenance margins are $5,000.

The trader would have to deposit an additional $3,125 into her account

The trader could withdraw $3,125 in her account

The trader would have to deposit an additional $1,625 into her account

The trader could withdraw $2,500 from her margin account

The trader could withdraw $1,625 from her margin account

2. A bank estimates that their average balance on demand deposit accounts is $2,000 net float. Each account costs the bank $150 per year in processing costs. The bank collects an average of $7.50 per month on each account in service charges. Assume reserve requirements are 10% If the bank can invest the deposit balance (After adjusting for reserve requirements) at 5%, what is the break-even deposit balance?

$1,000

$2,333

$1,667

$2,000

$1,333

Reference no: EM131935784

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