- The price of a 90-day forward contract on a 90-day Treasury bill will be: A) above the current price of a 90-day T-bill. B) either above or below the current price of a 180-day T-bill. C) equal to the current price of a 180-day T-bill. D) above the current price of a 180-day T-bill. 2) Faye Sagler takes a long position in 12 August yttrium futures contracts at a contract price of $3.50 per unit. Each contract is for 1,000 units of yttrium. The required initial margin is $400 per contract and the maintenance margin is $300 per contract. August yttrium futures decline to $3.42, $3.38, and $3.31 on the next three trading days. On the first day that Sagler will be required to deposit additional cash into her futures account, the required deposit is closest to: A) $240. B) $960. C) $1,440. D) $1,080. 3) Jillian Best is choosing between two mutual funds. Fund A has a front-end load of 4%, a net asset value (NAV) of $60.00, and an expected return of 13.0%. Fund B has a redemption fee of 1.5%, a NAV of $27, and an expected return of 10%. Jillian will invest $50,000 in either fund. Which of the following statements is most accurate if Jillian has a 6-month holding period? The: A) investments are equal. B) investor is better off with the front-end load fund by $120.00. C) investor is better off with the redemption fee fund by $712.50. D) investor is better off with the redemption fee fund by $592.50. I am just not attempting the Questions similar to 2 & 3. Do you guys have any recommendation on how to approach these problems intuitively ?
Q2. C Q3. Fund A = 50,000 * (1.13)^0.5 * 0.96 = 51,024.7 Fund B = 50,000 * (1.1)^0.5 * 0.985 = 51,653 Fund B is better according to me but I’m not getting any of those amounts mentioned …
- D (we did this recently so use search)