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NEW QUESTION: 1
DRAG DROP


Answer:
Explanation:

Explanation:

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NEW QUESTION: 2

A. Option D
B. Option B
C. Option A
D. Option E
E. Option C
Answer: C

NEW QUESTION: 3
A fund manager buys a gold futures contract at $1000 per troy ounce, each contract being worth 100 ounces of gold. Initial margin is $5,000 per contract, and the exchange requires a maintenance margin to be maintained at $4,000 per contract. Prices fall the next day to $980. What is the margin call the fund manager faces in respect of daily variation margin ?
A. $2000
B. $0
C. $1000
D. $7000
Answer: A
Explanation:
Explanation
The loss to the fund manager is $20*100 = $2,000. The initial margin placed was $5,000. After the loss is charged to his account, the margin balance is only $3,000 ($5,000 - $2,000). The margin to be maintained is
$5,000. Therefore the margin call is $2,000.
Note that there would have been no margin call till the balance in the margin account had reduced to the
'maintenance' level of $4,000. So if the price had fallen by $5, and the loss had been $500, there would have been no margin call. But when the margin call would be made, it would require the balance to be brought up to the initial margin of $5,000 (and not the maintenance margin of $4,000).

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