AGEC 4830 Homework Assignment #4 Margin Account 10 points (Please print or type your answers). (Be sure your name is listed clearly on the answers you turn in). For the problem below, calculate the daily account balance and the debit or credit and determine if there would be a "margin call" for each of the given days. In reality your account balance would probably fluctuate daily. That does not mean you however. I have omitted days for the purpose of example. After filling out the table answer would have daily margin calls, questions that follow. This is based on a CME Live Hog contract (40,000 Ib s.). The initial margin level is $1200/contract, and the maintenance margin level is $800/contract. Market Change Debiu/Credit Account [ Margin From Previous To Account Balance Call Da Day Market Action Day 1 Open Account $1200 $1200 Amount $0 Deposit $1200- Take no market Action Day 2 Sell/Short 1 July Live $62.00/cwt Day 20 July Live Hogs settled-$2.30 Hog @ @ $59.70/cwt @$63.80/cw @ S60.50/ewt @$59.50/cwt Day 40 July Live Hogs settled+$4.10 Day 60 July Live Hogs settled $3.30 Day 80 July Live Hogs settled$1.00 Day July Live Hogs settled $o.30 Day Buy/Long 1 July Live Hog $0.20 110 $59.80/cwt 120 Contract 1. How much money flows into the account between the end of Day 2 and the end of Day 20? 2. What is the account balance at the end of Day 20? 3. What would happen on Day 40? How much money is involved on this day? 4. What is the account balance at the end of Day 60? On Day 120, when the hedge is completed by buying back the futures contract, what is the ending account balance? (iIllustrate by calculating as Beginning balance plus inflows, minus outflows ending balance. 5