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?
| 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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