A trader buys two July futures contracts on frozen orange juice. Each contract is for the delivery of 15000 pounds. The current futures price is 250 cents per pound, the initial margin is $10000 per contract, and the maintenance margin is $8000 per contract. What price change would lead to a margin call? Under what eircumstances could $5000 be withdrawn from the margin account?

A trader buys two July futures contracts on frozen orange juice. Each contract is for the delivery of 15000 pounds. The current futures price is 250 cents per pound, the initial margin is $10000 per contract, and the maintenance margin is $8000 per contract. What price change would lead to a margin call? Under what eircumstances could $5000 be withdrawn from the margin account?

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter5: Currency Derivatives

Section: Chapter Questions

Problem 3IEE

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