Assume that the initial margin is $2,500 and the maintenance margin is $1,860 per contract and each contract is for AC125,000. a) Use the table below to track the margin account payments to a trader hold- ing a long position in one contract when the euros takes the following values (in terms of US dollars): 0.8450, 0.8485, 0.8423, 0.8355.

$ per euro |Daily gain/loss | Margin |Margin Call

0.8450. | 0.8485. |

0.8423. |

0.8355. | b) Who pays the counterparty when a futures trader defaults? Compare the credit risk of a futures contract and that of a forward contract.