Consider a long position of five July wheat contract. each of which covers 5,000 bushels. Assume that thee contract price is $2.00 and that each contract requires an initial margin deposit of $150 and a maintenance margin of $100. The total initial margin required for the 5-contract trade is $750. The maintenance margin for the account is $500. Compute the margin balance for this position after a 2 cent decrease in price on Day 1, a l-cent increase in price on Day 2, and a l-cent decrease in price on Day 3.

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Answered: Consider a long position of five July…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a long position of five July wheat contract. each of which covers 5,000 bushels. Assume that thee contract price is $2.00 and that each contract requires an initial margin deposit of $150 and a maintenance margin of $100. The total initial margin required for the 5-contract trade is $750. The maintenance margin for the account is $500. Compute the margin balance for this position after a 2 cent decrease in price on Day 1, a l-cent increase in price on Day 2, and a l-cent decrease in price on Day 3.

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