A Trader Buys a 90-Day Eurodollar Futures Contract at 95

question 39

Multiple Choice

A trader buys a 90-day Eurodollar futures contract at 95.25. The next day, interest rates fall to 4.5%. Which of the following is true? Assume that the initial and maintenance margins are $5,000.

• A) The trader would have to deposit an additional $5,000 into her account.
• B) The trader would have to deposit an additional $2,500 into her account.
• C) The trader would have to deposit an additional $625 into her account.
• D) The trader could withdraw $2,500 from her margin account.
• E) The trader could withdraw $625 from her margin account.

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Definitions:

Return On Investment

A financial metric used to evaluate the efficiency of an investment or to compare the efficiencies of several different investments, measuring gain versus cost.

Net Book Value

The value of an asset as recorded in the accounting records, subtracting accumulated depreciation or amortization from the original cost.

Intrinsic Reward

A type of motivation driven by an internal reward, like personal satisfaction or enjoyment of a task.

Job Satisfaction

The level of contentment employees feel about their job roles, which can affect motivation, performance, and turnover.