A grain elevator operator bought a futures contract for 5,000 kilograms of rice at $1.50 per kilogram. The initial margin is $4,000 and the maintenance margin is $2,000. (a) What change in (i) balance of margin account and (ii) price per kilogram will lead to a margin call? (b) Calculate the price per kilogram at which the margin call will be issued. (c) Calculate change in (i) balance of margin account and (ii) price per kilogram at which $2,000 could be withdrawn from the margin account.

A grain elevator operator bought a futures contract for 5,000 kilograms of rice at $1.50 per kilogram. The initial margin is $4,000 and the maintenance margin is $2,000. (a) What change in (i) balance of margin account and (ii) price per kilogram will lead to a margin call? (b) Calculate the price per kilogram at which the margin call will be issued. (c) Calculate change in (i) balance of margin account and (ii) price per kilogram at which $2,000 could be withdrawn from the margin account.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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