Question

Today's settlement price on a Chicago Mercantile Exchange (CME) € futures contract is $1.8500/€. Your initial...

Today's settlement price on a Chicago Mercantile Exchange (CME) € futures contract is $1.8500/€. Your initial performance bond is at $1800. The maintenance performance bond is $1,200. The next three days' settlement prices are $1.930/€, $1.7292/€, and $1.8985/€. (The contractual size of one CME € contract is €62,500). If you have a long position in one futures contract (sell €), the daily marking-to-market will result in the balance of the margin account after the third day to be A. $12,381.25 B. $558.50 C. $426.75 D. $781.50

I know the answer is A but how to i get it?

Homework Answers

Answer #1
Settlement Price Revised Value Deposit Balance
Initial margin $             1,800.00 $      1,800.00
Initial value of the contract = 62500*1.8500 = $       1,15,625.00 1.9300 $ 1,20,625.00 $      6,800.00
1.7292 $ 1,08,075.00 $        7,550.00 $      1,800.00
1.8985 $ 1,18,656.25 $    12,381.25
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