Your broker requires an initial margin of $6,075 per futures contract on wheat and a maintenance margin of $4,500 per contract. Wheat futures contracts are based on 5,000 bushels and quoted in cents per bushel. You sold one wheat futures contract yesterday at the closing settlement price quote of 786. Today, the settlement quote is 808. Will you receive a margin call and if so, for what amount? All margin calls restore the margin level to its initial level. If the settlement price was 816, would your answer(s) change? If so, how?
Your broker requires an initial margin of $6,075 per futures contract on wheat and a maintenance margin of $4,500 per contract. Wheat futures contracts are based on 5,000 bushels and quoted in cents per bushel. You sold one wheat futures contract yesterday at the closing settlement price quote of 786. Today, the settlement quote is 808. Will you receive a margin call and if so, for what amount? All margin calls restore the margin level to its initial level. If the settlement price was 816, would your answer(s) change? If so, how?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Your broker requires an initial margin of $6,075 per futures contract on wheat and a maintenance margin of $4,500 per contract. Wheat futures contracts are based on 5,000 bushels and quoted in cents per bushel. You sold one wheat futures contract yesterday at the closing settlement price quote of 786. Today, the settlement quote is 808. Will you receive a margin call and if so, for what amount? All margin calls restore the margin level to its initial level. If the settlement price was 816, would your answer(s) change? If so, how?
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