4. (a) On September 20, 2012 a speculator takes a long position in one December 2012 gold futures contract. The speculator closes out his position on October 19, 2012. Using the daily futures prices over that month as given in case Exhibit 7 compute the daily gain, cumulative gain, and margin account balance for every day. Assume that if the speculator receives a margin call, he is required to top up the margin account to the initial level. The contract size is 100 ounces. The initial margin per contract is $9,112.50 and the maintenance margin is $6,750 per contract (see Exhibit 4 for the specifications of the Gold Futures contract).

(b) Do the same computations for a speculator that takes a short position in one contract over the same period

Exhibit 7 Margin Date December 2012 Futures Price Daily Gain Cumulative Account Margin Gain Balance Call 9/20/12 1,770.2 9/21/12 1,778.0 9/24/12 1,764.6 9/25/12 1,766.4 9/26/12 1,753.6 9/27/12 1,780.5 9/28/12 1,773.9 10/1/12 1,783.3 10/2/12 1,775.6 10/3/12 1,779.8 10/4/12 1,796.5 10/5/12 1,780.8 10/8/12 1,775.7 10/9/12 1,765.0 10/10/12 1,765.1 10/11/12 1,770.6 10/12/12 1,759.7 10/15/12 1,737.6 10/16/12 1,746.3 10/17/12 1,753.0 10/18/12 1,744.7 10/19/12 1,724.0