a. Using Figure 22.1, compute the dollar value of the stocks traded on one contract on the Standard & Poor’s 500 index. The closing spot price of the S&P 500 index is given in the last line of the listing. If the margin requirement is 10% of the futures price times the multiplier of $250, how much must you deposit with your broker to trade the March contract?
b. If the March futures price were to increase to 1,370, what percentage return would you earn on your net investment if you entered the long side of the contract at the price shown in the figure?
c. If the March futures price falls by 1%, what is your percentage return?