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 Under what eircumstances could $5000 be withdrawn from the margin account?

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
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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what circumstances could $5000 be withdrawn from the margin account?
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 Under what circumstances could $5000 be withdrawn from the margin account?
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