Solved

An Investor Enters a Short Position Worth $10,000 in Futures

Question 53

Essay

An investor enters a short position worth $10,000 in futures contracts that require a maintenance margin that is 50% of this amount.The spot price of the underlying asset closes at the following prices for the next five days: $20.50, $20.75, $21.00, $20.75 and $20.00, and the current spot is $21.00.On what days will the investor receive a margin call and why? (Assume no deposits or withdrawals.)

Correct Answer:

verifed

Verified

Maintenance margin = 50% of 10...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents