5.31 A company enters into a short futures contract to sell 5,000 bushels of wheat for

250 cents per bushel. The initial margin is $3,000 and the maintenance margin is

$2,000. What price change would lead to a margin call? Under what circumstances

could $1,500 be withdrawn from the margin account?

5.33 The current price of a stock is $94, and three-month European call options with a

strike price of $95 currently sell for $4.70. An investor who feels that the price of

the stock will increase is trying to decide between buying 100 shares and buying

2,000 call options (= 20 contracts). Both strategies involve an investment of $9,400.

What advice would you give? How high does the stock price have to rise for the

option strategy to be more profitable?