You have a long position in one corn futures contract. Each futures contract calls for the delivery of 5,000 bushels of No. 2 corn. The initial margin was $2,500 and the maintenance margin is $1,250. At the close of trading yesterday, the futures price was $5.75 per bushel and the balance in your margin account was $3,250. Today, the settlement price for corn futures is $5.07. What is the minimum deposit necessary if there was a margin call?
You have a long position in one corn futures contract. Each futures contract calls for the delivery of 5,000 bushels of No. 2 corn. The initial margin was $2,500 and the maintenance margin is $1,250. At the close of trading yesterday, the futures price was $5.75 per bushel and the balance in your margin account was $3,250. Today, the settlement price for corn futures is $5.07. What is the minimum deposit necessary if there was a margin call?
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:You have a long position in one corn futures contract. Each futures contract calls for
the delivery of 5,000 bushels of No. 2 corn. The initial margin was $2,500 and the
maintenance margin is $1,250. At the close of trading yesterday, the futures price
was $5.75 per bushel and the balance in your margin account was $3,250. Today, the
settlement price for corn futures is $5.07. What is the minimum deposit necessary if
there was a margin call?
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