Question: Problem 1: (SSS) Suppose that you enter into a short futures contract to sell December silver for $17.20 per ounce. The size of the contract

 Problem 1: (SSS) Suppose that you enter into a short futures

Problem 1: (SSS) Suppose that you enter into a short futures contract to sell December silver for $17.20 per ounce. The size of the contract is 5,000 ounces. The initial margin is $4,000, and the maintenance margin is $3,000. What change in the futures spot price will lead to a margin call? What happens if you do not meet the margin call? Problem 2: (SSS) A trader entering into a long position to buy two December futures contracts on frozen Orange Juice. Each contract is for the delivery of 15,000 pounds. The current futures price is 160 cents per pound. The initial Margin is S6000 per contract and the maintenance margin is S4500 per contract. What price change would result in a margin call? Problem 3: (SSS) A company enters into a short futures contract to sell 5,000 bushels of wheat for 450 cents per bushel. The initial margin is $3,000 and the maintenance margin is $2,000. What price change would lead to a margin call? Under what circumstances could S1,500 be withdrawn from the margin account

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!