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Problem 2.2. A company has a short position in futures contract to sell 5,000 bushels of wheat. The company had entered into the contract when
Problem 2.2. A company has a short position in futures contract to sell 5,000 bushels of wheat. The company had entered into the contract when the futures price was 225 cents per bushel. The initial margin is $3,000 and the maintenance margin is $2,000. The current futures price is 250 cents per bushel and the margin account balance is $3,250. (a) Determine the net margin deposits to or margin withdrawals from the margin account so far. (6) What price change would lead to a margin call? (c) Under what circumstances can $1,000 be withdrawn from the margin account
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