Settlement price on chicago mercantile exchange futures

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Reference no: EM131845216

1. Assume today's settlement price on a Chicago Mercantile Exchange EUR (euro) futures contract ls $1.553/EUR. You enter into a futures contract to hedge a €250,000 payable expected in 6 months. Your initial margin account balance is $20,000. The next day's settlement price is $1.563/EUR Calculate the change in the margin account (also known as the daily profit/loss) and the new margin balance from the daily marking-to-market adjustment over the next day. The contract size is 250,000 euros. Initial margin balance (at today's close of $1.553/EUR): $20.000. ?

+2,600; 22.500

-200; 20.200

-2,500; 17,500

129; 20,129

2. A large increase in inflation in Mexico along with a small increase in US. Inflation is normally expected to cause (assuming no change in interest rates or other factors) a(n)_______ in Mexican demand for US goods, and the Mexican peso should ______. ?

Increase; depreciate

decrease; appreciate

decrease; depreciate

Increase; appreciate

3. Suppose a U.S firm outsources production to Mexico in order to take advantage of lower labor costs. However, the labor cost savings will be lower in the future than they are now if the U.S. dollar appreciates relative to the peso over time.?

True

False

Reference no: EM131845216

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