In January $2023,$ a trader takes a long position in ten May $2023$ corn futures contracts. Each

contract is for $(7000)$ bushels of corn and the current futures price is $$6\mathrm{.}50$ per bushel,

Assume that the initial margin is $$3,100$ per contract and the maintenance margin is $$1,750$

per contract. What value of the futures price in $ per bushel will result in a margin call?

$(5$ marks$)$

ii$)$ Suppose that the trader decides to close out their position in March $2023.$ What will their

total payoff be if the futures price at the time is $$6\mathrm{.}70$ per bushel?

$(3$ marks$)$

iii$)$ Explain why the payoff in $($ii$)$ above takes this form in the case of a long futures position.

$(6$ marks$)$