Suppose you bought a stock index futures contract for 200 and were required to put up initial margin of \(\$ 10,000\). The value of the contract is 200 times the \(\$ 500\) multiple, or \(\$ 100,000\). On the next three days, the contract's settlement price was at these levels: day 1, 205; day 2, 197; day 3, 190.

a. Calculate the value of your margin account on each day.

b. If the maintenance margin for the contract is \(\$ 7,000\), how much variation margin did the exchange require you to put up at the end of the third day?

c. If you had failed to put up that much, what would the exchange have done?