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Assume that the company hedges using the futures contracts, and the settlement prices on the futures contract used change as in the table below. The
Assume that the company hedges using the futures contracts, and the settlement prices on the futures contract used change as in the table below. The companys broker demands an initial margin of $600,000 and a maintenance margin of $500,000. Set up a margin account table using these settlement prices, assuming that any excess over the initial margin will be withdrawn and deposited into the companys bank account.
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