Question: Explain the concept of Initial margin, maintenance, and variation margin with the help of an example. A 6-month forward in gold has the following features.

Explain the concept of Initial margin, maintenance, and variation margin with the help of an example. "A 6-month forward in gold has the following features. An investor takes a long position in 2 (contracts) of June gold futures contracts on Jan 2nd. the contract size is 100 oz. the futures price is US$1,220 initial margin requirement is US$5,000/contract maintenance margin is US$3,000/contract Projected daily prices areas

Day 1 1220

Day 2 1214

Day 3 - 1209

Day 4 1203

Day 5 1208

Day 6 1190

Day 7 1202

Day 8 - 1210

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