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You took a short futures position in 10 contracts, covering each 100 ounces of gold at...

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Finance

You took a short futures position in 10 contracts, covering each100 ounces of gold at a price of $276.5 per ounce. The initial andthe maintenance margin requirement are respectively $1500 and is$1100 per contract. No withdrawal in any excess margin will bemade. Ignore any interest on the balance.

(b) The settlement prices per ounce of gold at the end of days1, 2 and 3 are respectively $278, $281 and $276. Complete the tablebelow assuming the contract is purchased at the settlement price ofthat day. [20]

Day

Beggining Balance

Funds Deposited

Futures Prices

Price Change

Gain/Loss

Ending Balance

0

1

2

3

Answer & Explanation Solved by verified expert
3.7 Ratings (577 Votes)

Day Opening Balance Funds Deposited Future Prices Price Change Gain/Loss Closing Balance
0                           -   (10*100*276.5)+ (10*1500) = 2,91,500.0             276.5          2,91,500.0
1            2,91,500.0                           -               278.0                -1.5 -1,500.0          2,90,000.0
2            2,90,000.0                           -               281.0                -3.0 -3,000.0          2,87,000.0
3            2,87,000.0                           -               276.0                  5.0     5,000.0          2,92,000.0

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Transcribed Image Text

You took a short futures position in 10 contracts, covering each100 ounces of gold at a price of $276.5 per ounce. The initial andthe maintenance margin requirement are respectively $1500 and is$1100 per contract. No withdrawal in any excess margin will bemade. Ignore any interest on the balance.(b) The settlement prices per ounce of gold at the end of days1, 2 and 3 are respectively $278, $281 and $276. Complete the tablebelow assuming the contract is purchased at the settlement price ofthat day. [20]DayBeggining BalanceFunds DepositedFutures PricesPrice ChangeGain/LossEnding Balance0123

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