Question: Below is the contract specification for the live cattle futures traded on the CME: Contract Name Quoted Units Trading Unit Minimum Fluctuation (tick size) Initial

Below is the contract specification for the live cattle futures traded on the CME:

Contract Name

Quoted Units

Trading Unit

Minimum Fluctuation (tick size)

Initial

Margin

Maintenance

Margin

Live Cattle

US cents per pound

40,000 pounds

0.025 cent per pound

$1,080

$800

Tom has just sold 10 April contracts at 92.475 cents and has deposited $12,000 into its margin account. Assume that the 10 cattle futures is the only position in his account.

1. At what futures price Toms margin account will be credited with $5,000.

2. At what futures price a margin call will be triggered against Toms margin account.

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