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1 2. Pwo commodity market speculators-one bullish and one bearish- choose to take opposite positions of 90 Metric Tons (MT) in April wheat at 12370
1 2. Pwo commodity market speculators-one bullish and one bearish- choose to take opposite positions of 90 Metric Tons (MT) in April wheat at 12370 per MT. Both maintain accounts at Ace Brokerage Limited that allow them to trade on exchange minimum margins. Both would be required to put up *240000 as initial cash margin to open their positions. Traders are aware that the exchange also set 180000 as the maintenance requirement for their contracts. . The minimum lot for gold futures is 10 MT meaning each of the speculator has boughtsold 9, contracts. Considering that wheat prices fluctuates, any adverse price movement will put one of the speculators into margin call territory. Calculate how much each of the speculators have to deposit/can withdraw if April wheat prices (a) rises to 13250 per MT, (b) crashes 11600 per MT resnectively. 10
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