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Yesterday, you entered into a futures contract to buy euro at $1.50/€. Your initial margin was 45% and your maintenance margin is 30%. At what threshold settlement price (use 4 decimal places) do you get a margin call?

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ProfLincoln

Answer:

$1.1786

Explanation:

Given

Initial purchase price = $1.50

Initial margin = 45%

maintenance margin is 30%

Margin call price = InitiaL purchase price × [1 - InitiaL margin / 1- maintenance margin]

= $1.50 × [1-45% / 1-30%]

=$1.50 × [0.55/0.70]

=$1.1786

Answer:

Answer is 1.1785.

Refer below for the explanation.

Explanation:

Euro at $1.50/€.

Initial 45%

Maintenance 30%

Price = Initial price ×( 1 - margin / 1- maintenance)

Put the values provided in te question,

= 1.50 × (1-45% / 1-30%)

=1.50 × (0.55/0.70)

=1.1785

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