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What will be the change in the futures price

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Reference no: EM132764194

Chicago Board of Trade has just introduced a new single stock futures contract on the stock of Mango, company currently paying no dividends. Each contract calls for delivery of 1000 shares of stock in one year. The T-bill rate is 6% per year.

Problem i. If Mango stock now sells at $120 per share, what should the futures price be?

Problem ii. If the Mango stock price drops by 3%, what will be the change in the futures price and the change in the investor's margin account?

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

Reference no: EM132764194

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