As a financial analyst at Deutsche Bank, NY, you are helping your client with futures hedging. Your client enters into a long position in futures contract to buy 5,000 bushels of wheat for $3.50 per bushel. The initial margin is $3,000 and the maintenance margin is $2,000. Your client will be allowed to withdraw any balance in the margin account in excess of the initial margin and the company will get a margin call if the balance is going below the maintenance margin.

a. What will be the price that will trigger a margin call of $1,000? (sample answer:$4.50)

b. What will be the price that will allow you to withdraw just $1,500 from the margin account? (sample answer:$4.50)