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 Under what eircumstances could $5000 be withdrawn from the margin account?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 Under what eircumstances could $5000 be withdrawn from the margin account?
Chapter5: Currency Derivatives
Section: Chapter Questions
Problem 3IEE
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![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what circumstances could $5000 be withdrawn from the margin account?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3a2f01f1-e9a5-47a3-862e-fb67ad5a9305%2F41f18ff5-aead-46a3-b91a-4da3f2d97c51%2Fsk42fn_processed.png&w=3840&q=75)
Transcribed Image Text: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what circumstances could $5000 be withdrawn from the margin account?
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