Carry prices three forwards and exposes one arbitrage, then five settlement days trigger three margin calls: this GF561 Unit 3 forward and futures problem shows every balance. Searches like "gf 561 unit 3 assignment example", "gf561 unit 3 sample" and "gf561 unit 3 example" land here.
What a finished GF561 Unit 3 forward and futures problem looks like
Four parts across about five pages. Part one prices a nine-month forward on a composite index at 4,800 with a 4.4 percent rate and a 1.6 percent dividend yield, reaching 4,901.87, then finds a quoted 4,930 too rich and sets out the cash-and-carry trade. Part two adds storage to grain: spot corn at 4.60 a bushel, three cents a month paid in arrears, a present value of 0.1777 for that storage and a six-month forward of 4.88. Part three applies interest rate parity to a euro quoted at 1.0850 dollars, producing a one-year forward of 1.1080. Part four holds four long crude contracts bought at 71.20, with initial margin of 26,000 and maintenance of 23,600, through five daily settlements.
How a GF561 Unit 3 example is structured
Every pricing part moves in one order: the carry relationship in symbols, what each term represents for that asset, the numbers substituted, and the result with its units. Continuous compounding is declared once at the top and used throughout, and a footnote shows the discrete equivalent for readers whose text uses it. Part one ends with the arbitrage laid out as a table of cash flows today and at delivery, so the profit is visible as a locked difference rather than asserted. The settlement part is a ledger: date, settlement price, daily gain or loss, balance before any call, the call itself and the balance after. A short paragraph under the ledger explains why the account needed fresh cash on three days although the position lost only 10,400 in total.
One compounding convention
Continuous rates appear throughout, declared in the opening line, so no part mixes an annual quote with an exponential formula halfway through a calculation.
Income lowers, storage raises
The index's 1.6 percent yield comes off the rate while grain storage is added to spot, and each sign is explained by what holding the asset earns or costs.
An arbitrage that costs nothing today
Borrowing to buy the index at 4,800 while selling the future at 4,930 locks 28.13 per unit at delivery, set out as flows at time zero and at nine months.
Parity for the euro
Dollar and euro rates of 4.4 and 2.3 percent carry the 1.0850 spot to 1.1080 in a year, a forward premium of about 230 points.
Three calls in five days
A first-day loss of 3,000 drops the account to 23,000, below maintenance, and the call restores 26,000; similar calls follow on days two and four.
Where marks go in GF561 Unit 3
Most lost marks in carry problems come from a sign: dividend yield added rather than subtracted, or storage treated as income, either of which pushes the forward the wrong way. Storage paid monthly and simply multiplied by six, without discounting, is a smaller error that graders still take. Arbitrage answers lose credit when they describe the trade but never show that it costs nothing today, since the zero initial outlay is the whole argument. In the settlement ledger, calls computed back to maintenance rather than up to initial margin, where the prompt specifies initial, change every later balance. Answers reporting only the cumulative loss and skipping the daily ledger miss the lesson the part exists to teach, the cash demanded while a position is still open.
Get a GF561 Unit 3 example written to your instructions
Spot prices, rates, contract sizes and margin levels from the GF561 Unit 3 set are what the work needs, plus your text's compounding convention and the rubric. Each forward gets priced term by term, and the ledger is kept day by day. A free first custom sample, typically delivered in 24-48h, shows the method on your own numbers.
GF561 Unit 3 questions, answered
Do I use continuous or discrete compounding?
Whichever your text uses, stated once and applied consistently. The sample works in continuous rates because most derivatives texts do, and it shows the discrete version of the index forward in a footnote so the two can be compared. Mixing the conventions inside one calculation produces small errors that are hard for a grader to credit as method.
Why does the margin call restore the initial level?
Because most exchange rules, and most textbook problems, require a call to bring the account back to initial margin rather than to maintenance. The sample states that assumption above the ledger. If your prompt specifies otherwise, the custom ledger follows your rule, and every balance after the first call changes accordingly.
Is a forward price a forecast of the future spot price?
Not in these problems. The forward price comes from carry, what it costs to buy the asset now and hold it, not from anyone's expectation about where the price is heading. The sample makes that distinction when it prices the index, since a forward that differed from the carry value would allow the riskless trade shown in part one.