Question
Today is October 8th and an investor takes a long position in one futures contract at the current futures price of $15.00 per unit. Each
Today is October 8th and an investor takes a long position in one futures contract at the current futures price of $15.00 per unit. Each contract is for the delivery of 1,000 units of the underlying asset. The initial margin is 25% of the value of the contract and the maintenance margin is 80% of the initial margin.
a) What are the initial margin and the maintenance margin on this contract?
Initial margin is $ ; Maintenance margin is $
b) What does the futures price need to be for a margin call to occur?
For a margin call, the futures price should be $
c) At what futures price could the investor withdraw $2,500 from the margin account?
To withdraw $2,500, the futures price should be $
d) If the settlement futures price on Oct 9th is $14.80, what is the balance in the margin account on that day?
The balance on October 9th is $
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