2.On Monday, you sold one Eurodollar interest rate futures contract for $97,500. Initial performance bond is $4,000 and the maintenance performance bond is $3,000.

Day

Settle price

Daily gain/loss

Margin balance

Monday

Tuesday

Wednesday

97,500

99,500

98,500

()

()

4,000

()

()

a)Figure out daily gain/loss and the margin balance for Tuesday. Do you receive the margin call or not on Tuesday? (40points)

b)Figure out daily gain/loss for Wednesday. (20points)

c)Do you take the current position (short position) on the interest rate futures contract to hedge against the rising or falling interest rate? (20points)