1) A trader sells four July futures contracts on frozen orange juice. Each contract is for the delivery of 15,000 pounds. The current futures price is 100 cents per pound, the initial margin is $5,000 per contract, and the maintenance margin is $3,000 per contract. a. What price change would lead to a margin call? b. Under what circumstances could $3,000 be withdrawn from the margin account? 2) Suppose that there are no storage costs for crude oil and the interest rate for borrowing or lending is 6% compounded continuously per annum. Suppose further that it is currently March. How could you make money if the futures prices of the June and December oil contracts for that year are $70 and $75, respectively? 3) Trader A enters into futures contracts to buy 1 million euros for 1.25 million dollars in four months. Trader B enters in a forward contract to do the same thing. The exchange rate (dollars per euro) declines sharply during the first three months and then increases during the fourth month to close at 1.2900. Ignoring daily settlement, calculate the total gain or loss of each trader. When the impact of daily settlement is taken into account, which trader does better? 1) A trader sells four July futures contracts on frozen orange juice. Each contract is for the delivery of 15,000 pounds. The current futures price is 100 cents per pound, the initial margin is $5,000 per contract, and the maintenance margin is $3,000 per contract. a. What price change would lead to a margin call? b. Under what circumstances could $3,000 be withdrawn from the margin account? 2) Suppose that there are no storage costs for crude oil and the interest rate for borrowing or lending is 6% compounded continuously per annum. Suppose further that it is currently March. How could you make money if the futures prices of the June and December oil contracts for that year are $70 and $75, respectively? 3) Trader A enters into futures contracts to buy 1 million euros for 1.25 million dollars in four months. Trader B enters in a forward contract to do the same thing. The exchange rate (dollars per euro) declines sharply during the first three months and then increases during the fourth month to close at 1.2900. Ignoring daily settlement, calculate the total gain or loss of each trader. When the impact of daily settlement is taken into account, which trader does better