. Questions 8, 9, and 10 below are based on the following information and assumptions: The Silver futures contract has contract size = 100 units (multiplier). The value of 1 futures contract is $10,000 (= $100 *100). AAA takes a Long position in 1 futures contract on Silver. BBB takes a Short position in 1 futures contract on Silver. The Margin Account is 10% of the value of a futures contract, i.e., the Margin Requirement is $1000 (This is also the Initial Margin). The Maintenance Margin = 75%*$1000 = $750. Assume that if there is a margin call, AAA or BBB will pay the variation margin. The following table provides information of Futures Price (F.) from Time 0 to 3: e e Timet Futures Price (F.) Change in Dollar Value of One Futures Contract from time 1-1 to 1 (note: each contract has multiplier = 100) Time 0 $100 Time 1 $96 = -$4*100 = -$400 Time 2 $101 = +$5*100 = +$500 Time 3 $96 = -$5*100 = -$500 08. Given the above information, when does AAA (with Long position in futures) experience a Margin Call? (A) AAA experiences a margin call at Time I only (B) AAA experiences a margin call at Time 2 only (C) AAA experiences margin calls at Time 1 and Time 3 (D) AAA does not experience any margin call from Time I to Time 3 Answer: 29. Given the above information, when does BBB (with Short position in futures) experience a Margin Call? (A) BBB experiences a margin call at Time 1 only (B) BBB experiences a margin call at Time 2 only (C) BBB experiences margin calls at Time 1 and Time 3 (D) BBB does not experience any margin call from Time I to Time 3 Answer: Q10. Which of the following feature of Futures market is highlighted in the above examples of AAA and BBB? (A) Zero-Sum Game (B) Margin requirement and marking-to-market (C) Mitigation of default risk (D) All of the above