Yesterday,you entered into a futures contract to buy €62,500 at $1.50/€.Your initial margin was $3,750 (= 0.04 × €62,500 × $1.50/€ = 4 percent of the contract value in dollars).Your maintenance margin is $2,000 (meaning that your broker leaves you alone until your account balance falls to $2,000).At what settle price (use 4 decimal places)do you get a margin call?
A)$1.4720/€
B)$1.5280/€
C)$1.500/€
D)none of the options

Question

Quizplus · Accepted Answer

To calculate the settle price that triggers a margin call, we need to use the following formula:

Settle price = (Maintenance margin + Initial margin) / (Contract size × Euro value in dollars)

Plugging in the numbers, we get:

Settle price = ($2,000 + $3,750) / (€62,500 × $1.50/€)
Settle price = $5,750 / $93,750
Settle price = 0.061333...

To convert this into a Euro price, we need to take the reciprocal:

Settle price = 1 / 0.061333...
Settle price = 16.295520231...
Settle price = $1.4720/€ (rounded to 4 decimal places)

Therefore, the answer is A) $1.4720/€.

Yesterday,you Entered into a Futures Contract to Buy €62,500 at $1.50/€.Your