Nanci Enters into a Long Position in 6,000 Futures Contracts

question 32

Essay

Nanci enters into a long position in 6,000 futures contracts that require a $6,000 initial margin and has a maintenance margin that is 75% of this amount.The futures price associated with this contract is $10.Assume that the spot price of the underlying asset closes at the following prices for the next five days: $10.50, $10.75, $11.00, $9.75 and $9.25.Estimate the daily profit (loss)for Nanci as well as her equity position.(Assume no cash deposits or withdrawals are made from the account.)

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Definitions:

Budgeting Process

The systematic approach to allocate financial resources and planning future expenditures and savings.

Delaying Sales

A strategy where sellers postpone transactions in anticipation of better market conditions or prices.

Accelerating Expenses

Expenses that increase at a faster rate than usual, often outpacing revenue growth.

Channel Stuffing

A practice where a company inflates its sales and earnings figures by deliberately sending retailers along its distribution channel more products than they can sell to the end-user.