Consider a hypothetical futures contract in which the current price is $212. The initial margin requirement is
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Question:
Consider a hypothetical futures contract in which the current price is $212. The initial margin requirement is $10, and the maintenance margin requirement is $8. You go long 20 contracts and meet all margin calls but do not withdraw any excess margin.
A. When could there be a margin call?
B. Complete the table below and explain any funds deposited. Assume that the contract is purchased at the settlement price of that day so there is no mark-to-market profit or loss on the day of purchase.
Day | Beginning Balance | Funds Deposited | Futures Price | Price Change | Gain/Loss | Ending Balance |
0 | 212 | |||||
1 | 211 | |||||
2 | 214 | |||||
3 | 209 | |||||
4 | 210 | |||||
5 | 204 | |||||
6 | 202 |
C. How much are your total gains or losses by the end of day 6?
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