Question
Each futures contract is on 2,000 bushels of wheat. The initial margin is $4,000 per contract and the maintenance margin is $3,000 per contract. (a)
Each futures contract is on 2,000 bushels of wheat. The initial margin is $4,000 per contract and the maintenance margin is $3,000 per contract.
(a) After putting $4,000 in the margin account, a company enters into 1 short futures contract to sell wheats at the futures price of $8.5 per bushel. At what price per bushel would the company receive the margin call?
(b) After putting $4,000 in the margin account, a company enters into 1 long futures contract to buy wheats at the futures price of $6.3 per bushel. At what price per bushel would the company receive the margin call?
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Finance for Executives Managing for Value Creation
Authors: Gabriel Hawawini, Claude Viallet
4th edition
9781133169949, 538751347, 978-0538751346
