Zack Wheat has just bought four September 5,000-bushel corn futures contracts at $1.75 per bushel. The initial margin requirement is 3%. The maintenance margin requirement is 80% of the initial margin requirement.
a. How many dollars in initial margin must Zack put up?
b. If the September price of corn rises to $1.85, how much equity is in Zack's commodity account?
c. If the September price of corn falls to $1.70, how much equity is in Zack's commodity account? Will Zack receive a margin call?