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1. Suppose John short sells (=writes) Apple put option to Mary. Is this identical to John buying Apple call option from Mary? Please explain in detail why they are the same or different.
2 A company enters into 5 long January futures contracts of wheat. The contract size of the wheat futures is 1,000 bushels and the current futures price is $3.00 per bushel. The initial margin requirement is $0.60 per bushel and the maintenance margin is $0.40 per bushel.
a. How much wheat does the company agreeing to buy/short in January?
b. How much cash does the company have to deposit to its margin account initially?
c. If futures price becomes $3.30 per bushel (10% increase), calculate the cumulative gain.
d. Calculate the rate of return when futures price becomes $3.30. (Hint: use answers to b and c.)
choose three 3 types of securities from any of the financial markets covered in the textbook during weeks 1 through 7.
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Under an effective interest rate of 5%, the sum of the present value of an annuity which pays $4 at the end of each period for n periods and the present value of a unique payment of $100 at the end of the nth period is equal to the sum of the present..
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