. Suppose an investor takes a long position in 1 Gold futures contract, and the following…

. Suppose an investor takes a long position in 1 Gold futures contract, and the following
information is given:
Contract size = 100 ounces.
Futures price = $500
Initial margin = $3,000 per contract.
Maintenance margin = $2,000 per contract

i. In which days will there be a margin call? How much will be the variation margin in all
cases?

ii. In which days do the balances in the margin account exceed the initial margin?

B. Party A agrees to pay Party B a fixed rate of 4%. Party B agrees to pay Party A a floating rate
based on the return of the S&P 500 Index. The payments will be made annually and will be
based on a notional principal of $1,000,000.

i. Suppose at the end of the first year, the S&P 500 appreciated by 4.5%. How much will Party
B will pay Party A

ii. What will happen in the second year, if the S&P 500 depreciated by 3%