An Investor Bought a March S&P 500 Index Futures Contract

question 32

Multiple Choice

An investor bought a March S&P 500 Index futures contract in December for $1,490.05. After six months the contract value went down to $1,466.00. The contract has a multiplier of 250. With an initial margin of $20,000, and a $16,000 maintenance margin requirement, would there be a call for more margin?

• A)No, the account would have an excess of $2,012.50
• B)Yes, an additional $3,677.19 would be required
• C)No, the account would have exactly enough cash for margin
• D)Yes, an additional $2,012.50 would be required
• E)No, the account would have an excess of $3,677.19

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Definitions:

Preferred Shares

A type of stock that provides a fixed dividend before any dividends are paid to common stockholders and typically has no voting rights.

Dividend

A portion of a company's earnings distributed to shareholders, typically in the form of cash or additional stock.

Weighted Average Cost

A method of calculating the combined cost of goods available for sale by weighting the cost of each item by the quantity purchased.