Suppose an investor has a $1 million long position in T-bond futures. The investors broker

requires a maintenance margin of 4 percent, which is the amount currently in the investors

account. (P6)

Suppose also that the value of the futures contract drops by $50,000 to $950,000. How much

will the investor be required to pay his broker to maintain his margin? What will be the value

of the investors account balance (assuming no excess) as a result of the price drop?