1. (8 pts) Futures' Mark-to-Market: Consider €125,000 futures contracts in which the current future price is $1.0766 per euro. The current initial margin requirement is $2,640 per contract, and the maintenance margin requirement is $2,400 per contract. You go long 10 contracts and meet all margin calls but do not withdraw any excess margin. Assume that on the first day, the contract is established at the settlement price, so there is no mark-to-market gain or loss on that day. Complete the table below. [Hint: I recommend you to find answers in Excel. See examples in the Slides and in the Practice Problem]
Day Required Deposit Beg. Balance Settle Price Daily Change Gain/Loss Ending Balance
0 (Purchase) 1.0760 - -
1 1.0753
2 1.0701
3 1.0682
2. (7 pts, including 5 points extra credit) Government Control: Study the exchange rate policy of one country (or one group of countries) of your choice and summarize what they did (fixed/pegged/floating/other interventions...) and implications and/or consequences to the financial markets. The policy can be during some particular time period (for example, Mexico around 1994 or Thailand/Asia around 1997). You can use the articles posted on D2L or examples in textbook (Chapter 6). Your report should be about 1 page long with normal text size and line spacing.