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OneChicago has just introduced a single-stock futu...

Description

Solution


Question

OneChicago has just introduced a single-stock futures contract on Brandex stock, a company that currently pays no dividends. Each contract calls for delivery of 1,000 shares of stock in 1 year. The T-bill rate is 6% per year. a. If Brandex stock now sells at $120 per share, what should the futures price be? b. If the Brandex price drops by 3%, what will be the change in the futures price and the change in the investor?s margin account? c. If the margin on the contract is $12,000, what is the percentage return on the investor?s position?

 

Paper#8796 | Written in 18-Jul-2015

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