7. A trader enters into 3 short futures contracts for 5,000 bushels of wheat per contract with futures price being $2.50 /bushel. The initial margin per contract is equal to $2,500 and the maintenance margin per contract is equal to $1,500. The trader has $7,500 in his margin account just before the next settlement. An increase in the next settlement futures price from $2.50 /bushel to /bushel will generate a margin call? A. $2.58 B. $2.70 C. $2.65 D. $2.75 An investor owns 5,000 shares of IBM stock, $105 per share. He thinks that there is is no large rise and possible drop in price. This investor decides to sell 50 December 110 call option at $6, receiving $30,000. Note: Each stock option contract provides for the right to buy or sell 100 shares of stock. December 110 call option means that the strike price of the call is 110 and it matures in December. Use this information to answer the following two questions. 8. If IBM stock price rises from $105 to $115, the profit associated with the passive strategy is and the profit associated with the covered call writing strategy is A. $50,000$75,000 B. $50,000$40,000 C. $50,000$55,000 D. $50,000$20,000 9. If IBM stock price decreases from $105 to $95, the profit associated with the passive strategy is writing strategy is and the profit associated with the covered call A. $50,000$15,000 B. $50,000$20,000 C. $25,000$5,000