Business, 23.12.2020 17:20 thexgar

a. Calculate the equity value of your margin account on each settlement date, including any additional equity required to meet a margin call. Also compute the amount of cash that will be returned to you on July 9, and the gain or loss on your position, expressed as a percentage of your initial margin commitment. b. Assuming that the underlying soybean meal investment pays no dividend and requires a storage cost of 1.5 percent (of current value), calculate the current (i. e., March 9) spot price for a ton of soybean meal and the implied May 9 price for the same ton. In your calculations, assume that an annual risk-free rate of 8 percent prevails over the entire contract life. c. Now suppose that on March 9 you also entered into a long forward contract for the purchase of 100 tons of soybean meal on July 9. Assume further that the July forward and futures contract prices always are identical to one another at any point in time. Calculate the cash amount of your gain or loss if you unwind both positions in their respective markets on May 9 and June 9, taking into account the prevailing settlement conditions in the two markets.

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a. Calculate the equity value of your margin account on each settlement date, including any addition...

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