Each contract is worth = 125,000 and the Margin = your equity position, while the Initial Margin = the amount of money you must put into an account to open the futures position. This is still your money as you have not bought the contract, instead the margin amount is your escrow (or good faith) money to assure you will be able to pay for a loss to you in the contract. The Maintenance Margin = The minimum amount allowed in your margin account. Below that amount the futures position may be closed if you do not add funds to your account. Finally, the Margin Call = When your account reaches the Maintenance level and the futures broker calls you asking for more money.

1. You want to enter 3 March contracts to buy euros at $1.17. The Initial Margin requirement is 3% and the Maintenance requirement is 30% of Initial Margin requirement. a. What is the Initial Margin dollar amount? b. At what margin amount will you receive a margin call? c. At what exchange rate will you receive a margin call? d. If the exchange rate goes to $1.14/1 what will be the gain or loss on your futures contracts? e. If the exchange rate goes to $1.22/1 what will be the gain or loss on your futures contracts?