An investor bought a March S&P 500 Index futures contract in December for $1,490.05. After six months the contract value went up to $1,539.95. The contract has a multiplier of 250. With an initial margin of $20,000, what is the percent return on margin?
A)62.38%
B)60.32%
C)7.70%
D)7.45%
E)6.32%

Question

Quizplus · Accepted Answer

The percent return on margin is calculated by taking the profit or loss on the investment and dividing it by the initial margin requirement. The profit from the futures contract is calculated by subtracting the purchase price from the selling price and then multiplying by the contract multiplier. Profit = ($1,539.95 - $1,490.05) * 250 = $12,475Percent return on margin = (Profit / Initial Margin) * 100 = ($12,475 / $20,000) * 100 = 62.375%Rounded to two decimal places, the percent return on margin is 62.38%.

An Investor Bought a March S&P 500 Index Futures Contract