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9. The price of a 3-month prepaid forward on the Power Windows Corporation is 140. The forward price for a 3 month forward on Power Windows Corporation is 142. Power Windows Corporation pays quarterly dividends of 5. The next dividend is due in 2 months. Calculate the current spot price of the stock of the Power Windows Corporation. (Ans = 144.95)

10. A. (4 points) Geddy purchases nine S&P 500 Futures Contracts with a futures price of 3600. Geddys initial margin requirement is 10%. His maintenance margin requirement is 85%. The margin account earns interest at an annual rate of 8.00% compounded continuously. The margin account is marked to market weekly. At the end of one week after the purchase, the S&P 500 futures price has fallen to 3550. Calculate Geddys margin call. Show all work.

10 B. (5 points) Repeat 10A, but at the end of one week after the purchase, the S&P futures price has fallen to 3500.

11. A. (4 points) Geddy SHORTS nine S&P 500 Futures Contracts with a futures price of 3600. Geddys margin requirement is 12%. His maintenance margin is 90%. The margin account earns 6.00% compounded continuously. The margin account is marked to market weekly. At the end of one week after the purchase, the S&P futures price has fallen to 3550. Calculate Geddys margin call.

B. (5 points) Continue Q11A. After the 2nd week, the S&P 500 Index rises to 3640

12. (5 points) Alex shorts five S&P 500 futures contracts. The S&P 500 futures price is 3600 at the date of purchase. The initial margin requirement is 12%. The maintenance margin is 85%. The margin account earns 7.00% compounded continuously. The futures contracts are marked to market weekly. At the end of one week, the S&P 500 futures price is X and the amount in the margin account is exactly equal to the maintenance margin amount. Determine X.

13. (5 points) Neil purchases ten S&P 500 Futures Contracts with a futures price of 4000. Neils initial margin requirement is 8%. His maintenance margin is X%. The margin account earns 6% compounded continuously. The margin account is marked to market weekly. At the end of one week after the purchase, the S&P futures price has fallen to 3955. Neils margin account is now 15,576.39 less than the maintenance margin. Determine X

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