Essay
Fred has just sold short 3 contracts of May wheat on the CBT. These are 5,000 bushel contracts. The initial deposit is $1,500 per contract with a maintenance margin of $1,200.
(a) What is Fred's total initial margin?
(b) How much of an increase in the price of wheat is necessary to cause a margin call?
Correct Answer:
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(a) (3)($1,500) = $4,500
(b) (...View Answer
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(b) (...
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