QUESTION 1

1. Consider an investor who contacts his/her broker on December 10^th to enter into SHORT position on 30 February Crude oil futures contract.

   Contract to be traded = 30 contracts

   Each contract size = 1000 barrel

   Maintenance margin required = $4600 per contract

   Suppose that current futures price is $36.50 per barrel.

   Initial margin requirement is set at 110% of the maintenance margin.

   Suppose the following futures prices occur for each day. Note that following traded price and futures prices are per-barrel-price.

   date	traded price	settlement price	daily loss/gain	cum. loss/gain	Acct bal.	Margin call (yes/no)	"variation margin" margin call amt ($)	Acct. bal (after adjusting margin call)
   10-Dec	$36.50
   		$36.76
   11-Dec		$37.16
   12-Dec		$37.51
   13-Dec		$37.65
   14-Dec	$37.00
   			total cum.loss/gain=	0

   1) FIND THE INITIAL MARGIN AND MAINTENANCE MARGIN FOR THE TOTAL CONTRACT, RESPECTIVELY. WHAT IS THE ACCOUNT BALANCE ON DEC/12?

   2) IS THERE ANY MARGIN CALL? IF SO, WHEN DOES IT OCCUR? AND HOW MUCH IS NEEDED TO RESPOND TO THE MARGIN CALL (i.e. what is the variation margin)?

   3) WHAT IS THE TOTAL CUMULATIVE LOSS OR GAIN?

   *note: since this is a "short" position, whenever a futures price drops, it will be a gain and vice versa.