Consider the wheat futures contract with 3 months to maturity (contract size: 5000 bushels, quotation: cents/bushel, initial margin $1200/contract, maintenance margin 75% of initial margin). Suppose that a firm shorts 8 contracts when the futures price is at 598. Suppose that the following settlement prices are recorded in the subsequent days: F1 = 608, F2 = 597, F3 = 589, F4 = 592, F5 = 601, F6 = 582, : F7 = 607, F8 = 615, F9 = 603, F10 = 611, F11 = 622, F12 = 620, F13 = 632, F14 = 622.

a) Use the spreadsheet FNCE 4408-Assignment04.xlsx to describe the evolution of the margin account over these 14 days

b) Assuming that the firm answers all margin calls. (assuming that the firm answers all margin calls and does not withdraw any excess balances), how much in total does the fabricator gain or lose on its futures position at the end of these fourteen days?

c) Describe the evolution of the margin account if the firm is long 10 contracts.