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Question
An investor has just sold seven contracts of June corn on the CBOT. The price per bushel is $1.64, and each contract is for 5000 bushels. The performance bond (initial margin deposit) is $2000 per contract with the maintenance margin at $1250. (a) How much does the investor have to deposit on the investment?(b) If the prices of the futures on the three days following the short sales were: 1.60,
1.66, and 1.68 calculate the current equity on each of the next three days.
(c) If the investor closes out his position on the fourth day, what is his final gain or loss over the four days in dollars and as a percentage of investment?
Answer
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