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Consider a hypothetical futures contract in which the current price is $212. The initial margin requirement is $10, and the maintenance margin requirement is $8.

Consider a hypothetical futures contract in which the current price is $212. The initial margin requirement is $10, and the maintenance margin requirement is $8. You go long 20 contracts and meet all margin calls but do not withdraw any excess margin.

A. When could there be a margin call?

B. Complete the table below and explain any funds deposited. Assume that the contract is purchased at the settlement price of that day so there is no mark-to-market profit or loss on the day of purchase.

Day

Beginning

Balance

Funds

Deposited

Futures

Price

Price

Change

Gain/Loss

Ending

Balance

0

212

1

211

2

214

3

209

4

210

5

204

6

202

C. How much are your total gains or losses by the end of day 6?

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When the ending balance that is the beginning balance fall below 160 a margin calls is made and you ... blur-text-image

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