alyst at Deutsche Bank, NY, you are helping your client with futures hedging. Your client enters into a long position in futur buy 5,000 bushels of wheat for $6.50 per bushel. The initial margin is $3,000 and the maintenance margin is $2,000. Your client will be all any balance in the margin account in excess of the initial margin and the company will get a margin call if the balance is going below the m margin. a. Will the trader get a margin call if the futures price goes to $6.14? b. What will be the price that will trigger a margin call of $2,500? c. What will be the price that will allow you to withdraw just $2,500 from the margin account? (sample answer: Yes or No) (sample answer $4.50) (sample answen
alyst at Deutsche Bank, NY, you are helping your client with futures hedging. Your client enters into a long position in futur buy 5,000 bushels of wheat for $6.50 per bushel. The initial margin is $3,000 and the maintenance margin is $2,000. Your client will be all any balance in the margin account in excess of the initial margin and the company will get a margin call if the balance is going below the m margin. a. Will the trader get a margin call if the futures price goes to $6.14? b. What will be the price that will trigger a margin call of $2,500? c. What will be the price that will allow you to withdraw just $2,500 from the margin account? (sample answer: Yes or No) (sample answer $4.50) (sample answen
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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Transcribed Image Text:As a financial analyst at Deutsche Bank, NY, you are helping your client with futures hedging. Your client enters into a long position in futures contract to
buy 5,000 bushels of wheat for $6.50 per bushel. The initial margin is $3,000 and the maintenance margin is $2,000. Your client will be allowed to withdraw
any balance in the margin account in excess of the initial margin and the company will get a margin call if the balance is going below the maintenance
margin.
a. Will the trader get a margin call if the futures price goes to $6.14?
(sample answer: Yes or No)
b. What will be the price that will trigger a margin call of $2,500?
C. What will be the price that will allow you to withdraw just $2,500 from the margin account?
(sample answer $4.50)
(sample answer:$4.50)
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