If You Bought Eight Contracts of Euro Currency Futures (I

question 63

Multiple Choice

If you bought eight contracts of Euro currency futures (i.e. total of one million Euros) with an initial margin of $2835 per contract. You buy the contracts at $1.3468/Euro and after a few days of trading ends at a price of $1.3534/Euro with the following ending price each day:
$1) 3465, $1.3443, $1.3434 and $1.3534. What would be the margin account value sequence be? Starting value being $22,680 .

• A) $22,680, $22,180, $20,380, $19,280, $29,280
• B) $22,680, $22,380, $20,180, $19,280, $29,280
• C) $22,680, $22,180, $19,280, $22,380, $29,280
• D) none of the above

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets over its current liabilities.

Investing Activity

Transactions involving the purchase or sale of long-term assets and other investments not included in cash equivalents.

Return on Assets

A financial ratio indicating how profitable a company is relative to its total assets, measuring the efficiency of asset use.

Leverages

The use of borrowed money (debt) in addition to equity in the investment to finance the purchase of assets and increase the potential return on investment.