Answered

At Westonci.ca, we connect you with the best answers from a community of experienced and knowledgeable individuals. Get immediate answers to your questions from a wide network of experienced professionals on our Q&A platform. Get immediate and reliable solutions to your questions from a community of experienced professionals on our platform.

a company enters into a long futures contract to buy 4,000 barrels of oil for $62.50 per barrel. the initial margin is $62.50 x 4,000. what oil futures price will allow $2,000 to be withdrawn from the margin account

Sagot :

anthougo

Answer:

For $2,000 to be withdrawn from the margin account, the oil futures price must be $62.

Explanation:

a) Data and Calculations:

Price of the long futures contract to buy 4,000 barrels of oil = $62.50 per barrel

Initial margin = $62.50 * 4,000

b) If the futures price is fixed at $62 per barrel and the initial margin per barrel already opened with a broker is $62.50, then the security investor can withdraw $2,000 ($0.50 * 4,000) from the margin account.  This will result in an excess of $0.50 per barrel.  Computationally, $0.50 * 4,000 = $2,000.

Thank you for your visit. We are dedicated to helping you find the information you need, whenever you need it. We hope this was helpful. Please come back whenever you need more information or answers to your queries. Find reliable answers at Westonci.ca. Visit us again for the latest updates and expert advice.