PUB3701 ASSIGNMENT 03 FOR
1ST SEMESTER 2024 -2025
DISTINCTION
A company enters into a long futures contract to buy 1,000 units of a
commodity for
... [Show More] $60 per unit. The initial margin is $6,000 and the maintenance
margin is $4,000. What futures price will allow $2,000 to be withdrawn from
the margin account? - ANS-58
66
64
*62*
A company enters into a short futures contract to sell 50,000 units of a
commodity for 70 cents per unit. The initial margin is $4,000 and the
maintenance margin is $3,000. What is the futures price per unit above which
there will be a margin call? - ANS-78cents
*72cents*
76 cents
74 cents
A company has a $36 million portfolio with a beta of 1.2. The futures price for
a contract on an index is 900. Futures contracts on $250 times the index can
be traded. What trade is necessary to neutralize the portfolio to be risk free? -
ANS-*Short 192 contracts*
Long 192 contracts
Long 96 contracts
Short 96 contracts
A company has a $36 million portfolio with a beta of 1.2. The futures price for
a contract on an index is 900. Futures contracts on $250 times the index can
be traded. What trade is necessary to increase beta to 1.8? - ANS-Long 192
contracts
A company due to pay a certain amount of a foreign currency in the future decides to
hedge with futures contracts. Which of the following best describes the advantage of
hedging? - ANS-It leads to a better exchange rate being paid
It caps the exchange rate that will be paid
*It leads to a more predictable exchange rate being paid*
It provides a floor for the exchange rate that will be paid
A company enters into a long futures contract to buy 1,000 units of a commodity for $60
per unit. The initial margin is $6,000 and the maintenance margin is $4,000. What
futures price will allow $2,000 to be withdrawn from the margin account? - ANS-58
66
64
*62*
A company enters into a short futures contract to sell 50,000 units of a commodity for 70
cents per unit. The initial margin is $4,000 and the maintenance margin is $3,000. What
is the futures price per unit above which there will be a margin call? - ANS-78cents
*72cents*
76 cents
74 cents
A company has a $36 million portfolio with a beta of 1.2. The futures price for a contract
on an index is 900. Futures contracts on $250 times the index can be traded. What
trade is necessary to neutralize the portfolio to be risk free? - ANS-*Short 192 contracts*
Long 192 contracts
Long 96 contracts
Short 96 contracts
A company has a $36 million portfolio with a beta of 1.2. The futures price for a contract
on an index is 900. Futures contracts on $250 times the index can be traded. What
trade is necessary to increase beta to 1.8? - ANS-Long 192 contracts
Short 96 contract [Show Less]