Question
Sarah Jones figured that gold prices are about to fall from todays price. On March 1, she shorted 10 futures contracts on December gold for
Sarah Jones figured that gold prices are about to fall from today’s price. On March 1, she shorted 10 futures contracts on December gold for F1 = 1,900. Each contract is for 100 ounces.
Nervously, she watched the gold price rising. Sarah decided to close out her position on April 30thFutures contract for December gold was trading at F2 = 1940.
When Sarah shorted the gold futures, margin requirement was $9.500 per contract and maintenance margin was $5,700 per contract.
At what price of gold, would she receive a margin call?
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Get StartedRecommended Textbook for
Fundamentals of Investments, Valuation and Management
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
8th edition
978-1259720697
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