Find your return on invested capital

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1. PQU stock trades for $56/share on 9/30, but you believe the stock price will decline over the next few days. You decide to use five futures contracts to trade based on your belief. Futures contracts on PQU have 125 shares attached. The price for PQU futures on 9/30 is $54/share. Your broker requires an initial margin of $3000 per contract and a maintenance margin of $1500 per contract.

The price for PQU futures is $67 on 10/2. Find your ending margin balance on 10/2. Assume deficits are eliminated to keep the position open.

6875

23,175

15,000

21,874.5

2. PQU stock trades for $56/share on 9/30, but you believe the stock price will decline over the next few days. You decide to use five futures contracts to trade based on your belief. Futures contracts on PQU have 125 shares attached. The price for PQU futures on 9/30 is $54/share. Your broker requires an initial margin of $3000 per contract and a maintenance margin of $1500 per contract.

Find your return on invested capital if you close your position when PQU trades at $65/share.

-.375

.2432

-.2973

.375

Reference no: EM131918804

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