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Economics

The Chicago Board of Trade has just introduced a new futures contract on Brandex stock, a company that currently pays no dividends. Each contract calls for delivery of 1,000 shares of stock in one year. The annual risk free rate is 6%.

1. If Brandex stock now sells at $120 per share, what should the futures prices be?

2. If the margin on the contract is $12,000, what is the percentage return on the investor's position?

3. If the Brandex price drops by 3% immediately, what will be the change in the futures price and the change in the investor's margin account?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91225695

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