Question

Today's settlement price on a Chicago Mercantile Exchange (CME) Yen futures contract is $0.8623/¥100. Your margin account currently has a balance of $1,487. The next three days' settlement prices are $0.8651/¥100, $0.8647/¥100, and $0.8657/¥100. (The contractual size of one CME Yen contract is ¥12,000,000). If you have a short position in one futures contract, then what will the balance of the margin account be after the third day?

Show you workings and the correct answer as follows in the space provided below:

Day one profit or loss (show your workings):

Day two profit or loss (show your workings):

Day three profit or loss (show your workings):

Balance of the margin account after the third day:

One of the following amounts  will be the balance of the margin account after the third day:

a. $1,151

b. $1,391

c. $1,823

d. $1,079

Answer 1

Day one profit or loss (show your workings): (Sell price - Buy Price) * Contract / 100

Day one profit or loss (show your workings): (0.8623 - 0.8651) * 12000000 / 100

Day one profit or loss (show your workings): -$336

Day two profit or loss (show your workings): (Sell price - Buy Price) * Contract / 100

Day two profit or loss (show your workings): (0.8651 - 0.8647) * 12000000 / 100

Day two profit or loss (show your workings): 48

Day three profit or loss (show your workings): (Sell price - Buy Price) * Contract / 100

Day three profit or loss (show your workings): (0.8647 - 0.8657) * 12000000 / 100

Day three profit or loss (show your workings): -$120

Balance of the margin account after the third day: $1487 - 334 + 48 - 120 = $1079

One of the following amounts  will be the balance of the margin account after the third day:

d. $1,079

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