Tim owns a gold mine in Sovereign Hill and sells gold to a jewellery factory....
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Tim owns a gold mine in Sovereign Hill and sells gold to a jewellery factory. On 1 May, Tim longs two of the 1 June gold futures contracts at $1740 per ounce. Each contract covers 10 ounces of gold. At the end of the first day, the closing futures price is $1730 per ounce. The future prices for the following days are provided in the table. (Required: Show your work step by step. For calculation questions, answers without a working process are not acceptable. This rule is applied to all calculation questions.) (a) Tims broker requires him to deposit 30% of the total contract value as the initial margin. The maintenance margin is 70% of the initial margin. How much are the initial margin and the maintenance margin? (2 marks)
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