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A trader buys two July futures contracts on frozen orange juice concentrate. Each contract is for the delivery of 15,000 pounds. The current futures price
A trader buys two July futures contracts on frozen orange juice concentrate. Each contract is for the delivery of 15,000 pounds. The current futures price is 160 cents per pound, the initial margin is $6,000 per contract, and the maintenance margin is $3,000 per contract. Required: (10 Marks) (1) What price change would lead to a margin call? 5 marks (2) Under what circumstances could $4,000 be withdrawn from the margin account? 5 marks
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