The cash flow from the mark-to-market proceeds on the contract supposing that after 1 month stock index is at 1,820. Introduction: Cash flows: It is the total amount of money which comes into the firm or goes out of firm. It mainly affects the liquidity position of the firm.

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Answer 1

Question

Chapter 22, Problem 14PS

a

Summary Introduction

To compute: The cash flow from the mark-to-market proceeds on the contract supposing that after 1 month stock index is at 1,820.

Introduction:

Cash flows: It is the total amount of money which comes into the firm or goes out of firm. It mainly affects the liquidity position of the firm.

b.

Summary Introduction

To compute: The holding-period return when the initial margin of the contract is $5000

Introduction:

Holding period: It is supposed to be the time for which the investment is held by the investor. In other words, it can be the period of the investment between the activity of purchase and sale of a security.

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The multiplier for a futures contract on a certain stock market index is $250. The maturity of the contract is one year, the current level of the index is 1,500, and the risk-free interest rate is 0.2% per month. The dividend yield on the index is 0.1% per month. Suppose that after one month, the stock index is at 1,533. Find the cash flow from the mark-to-market proceeds on the contract. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Cash flow

the multiplier of a futures contract on the stock market index is $250. The maturity of the contract is one year. The current level of the index is 2550 , and the risk free interest rate is .0% per month. The dividend yield on the index is .2% per month. Suppose that after five months, the stock index is at $2495. Assume that the party condition always hold exactly. Find the holding period return for the short position if the initial margin of the contract is 10% of the original contract value.

Suppose a stock is currently (time t = 0) worth 100. Further, suppose the one year annually compounded interest rate is 2%, and the two year annually compounded rate is 3%. Find the following:a) The forward price for a forward contract on the stock with maturity year T1 = 1. b) The forward price for a forward contract on the stock with maturity year T2 = 2.c) The forward price for a forward contract with maturity T1 = 1 on a ZCB with maturity T2 = 2.d) The forward price for a forward contract with maturity T1 = 1 on a forward contract on the stock with maturity T2 = 2 and delivery price K = 101.

Answer 2

Question

Chapter 22, Problem 14PS

a

Summary Introduction

To compute: The cash flow from the mark-to-market proceeds on the contract supposing that after 1 month stock index is at 1,820.

Introduction:

Cash flows: It is the total amount of money which comes into the firm or goes out of firm. It mainly affects the liquidity position of the firm.

b.

Summary Introduction

To compute: The holding-period return when the initial margin of the contract is $5000

Introduction:

Holding period: It is supposed to be the time for which the investment is held by the investor. In other words, it can be the period of the investment between the activity of purchase and sale of a security.

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Answer 3

Question

Chapter 22, Problem 14PS

a

Summary Introduction

To compute: The cash flow from the mark-to-market proceeds on the contract supposing that after 1 month stock index is at 1,820.

Introduction:

Cash flows: It is the total amount of money which comes into the firm or goes out of firm. It mainly affects the liquidity position of the firm.

b.

Summary Introduction

To compute: The holding-period return when the initial margin of the contract is $5000

Introduction:

Holding period: It is supposed to be the time for which the investment is held by the investor. In other words, it can be the period of the investment between the activity of purchase and sale of a security.

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Answer 4

Question

Chapter 22, Problem 14PS

a

Summary Introduction

To compute: The cash flow from the mark-to-market proceeds on the contract supposing that after 1 month stock index is at 1,820.

Introduction:

Cash flows: It is the total amount of money which comes into the firm or goes out of firm. It mainly affects the liquidity position of the firm.

b.

Summary Introduction

To compute: The holding-period return when the initial margin of the contract is $5000

Introduction:

Holding period: It is supposed to be the time for which the investment is held by the investor. In other words, it can be the period of the investment between the activity of purchase and sale of a security.

Expert Solution & Answer

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Answer 5

Chapter 22, Problem 14PS

a

Summary Introduction

To compute: The cash flow from the mark-to-market proceeds on the contract supposing that after 1 month stock index is at 1,820.

Introduction:

Cash flows: It is the total amount of money which comes into the firm or goes out of firm. It mainly affects the liquidity position of the firm.

b.

Summary Introduction

To compute: The holding-period return when the initial margin of the contract is $5000

Introduction:

Holding period: It is supposed to be the time for which the investment is held by the investor. In other words, it can be the period of the investment between the activity of purchase and sale of a security.

Answer 6

Chapter 22, Problem 14PS

a

Summary Introduction

To compute: The cash flow from the mark-to-market proceeds on the contract supposing that after 1 month stock index is at 1,820.

Introduction:

Cash flows: It is the total amount of money which comes into the firm or goes out of firm. It mainly affects the liquidity position of the firm.

Answer 7

Chapter 22, Problem 14PS

a

Summary Introduction

To compute: The cash flow from the mark-to-market proceeds on the contract supposing that after 1 month stock index is at 1,820.

Introduction:

Cash flows: It is the total amount of money which comes into the firm or goes out of firm. It mainly affects the liquidity position of the firm.

Answer 8

b.

Summary Introduction

To compute: The holding-period return when the initial margin of the contract is $5000

Introduction:

Holding period: It is supposed to be the time for which the investment is held by the investor. In other words, it can be the period of the investment between the activity of purchase and sale of a security.

Answer 9

b.

Summary Introduction

To compute: The holding-period return when the initial margin of the contract is $5000

Introduction:

Holding period: It is supposed to be the time for which the investment is held by the investor. In other words, it can be the period of the investment between the activity of purchase and sale of a security.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 22 - Prob. 1PS Ch. 22 - Prob. 2PS Ch. 22 - Prob. 3PS Ch. 22 - Prob. 4PS Ch. 22 - Prob. 5PS Ch. 22 - Prob. 6PS Ch. 22 - Prob. 7PS Ch. 22 - Prob. 8PS Ch. 22 - Prob. 9PS Ch. 22 - Prob. 10PS

The cash flow from the mark-to-market proceeds on the contract supposing that after 1 month stock index is at 1,820. Introduction: Cash flows: It is the total amount of money which comes into the firm or goes out of firm. It mainly affects the liquidity position of the firm.

Solution Summary: The author calculates the cash flow from the mark-to-market proceeds on the contract supposing that after 1 month stock index is at 1,820

To compute: The cash flow from the mark-to-market proceeds on the contract supposing that after 1 month stock index is at 1,820.

Introduction:

Cash flows: It is the total amount of money which comes into the firm or goes out of firm. It mainly affects the liquidity position of the firm.

Want to see the full answer?

Chapter 22 Solutions

The cash flow from the mark-to-market proceeds on the contract supposing that after 1 month stock index is at 1,820. Introduction: Cash flows: It is the total amount of money which comes into the firm or goes out of firm. It mainly affects the liquidity position of the firm.

Solution Summary: The author calculates the cash flow from the mark-to-market proceeds on the contract supposing that after 1 month stock index is at 1,820

To compute: The cash flow from the mark-to-market proceeds on the contract supposing that after 1 month stock index is at 1,820. Introduction: Cash flows: It is the total amount of money which comes into the firm or goes out of firm. It mainly affects the liquidity position of the firm.

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Chapter 22 Solutions

To compute: The cash flow from the mark-to-market proceeds on the contract supposing that after 1 month stock index is at 1,820.

Introduction:

Cash flows: It is the total amount of money which comes into the firm or goes out of firm. It mainly affects the liquidity position of the firm.