Explore BrainMass
Share

# Cumulative Rate of Return of Stocks

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

I need help with the attatched questions on stocks.

https://brainmass.com/economics/contracts/cumulative-rate-return-stocks-354465

#### Solution Preview

Question one
On Monday morning you sell one June T-bond futures contract at 97:27 or for \$97843.75. The contracts face value is \$100000. The initial margin requirement is \$2700 and the maintenance margin requirement is \$2000 per contract. Use the following data to answer the questions.
Day Settle
Monday \$97 406.25
Tuesday \$98 000.00
Wednesday \$100 000.00

1. What is the balance on your margin account after Mondays close?
Date/Day Settlement Price (\$) Mark-to-market Other entries Account Balance Explanation
Monday morning \$97,843.75 0 \$2700 \$2700 Initial margin deposit of \$2700.
Monday Closing \$97,406.25 +\$437.50 \$3137.50 Price fell by 13/32 leaving profit by day end of \$437.50
The balance in the margin account after the Monday close will be \$3137.50

2. What is the cumulative rate of return on your investment at close of day on Tuesday?
Date/Day Settlement Price (\$) Mark-to-market Other entries Account Balance Explanation
Monday morning \$97,843.75 0 \$2700 \$2700 Initial margin deposit of \$2700.
Monday ...

#### Solution Summary

This solution solves the cumulative rate of return.

\$2.19