An investor enters into 3 short futures contracts of wheat, Ask an Expert

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An investor enters into 3 short futures contracts of wheat for 320 cents per bushel. The initial margin is $2,200 per contract and the maintenance margin is $1,600 per contract. The investor begins the trading day with $5,100 in her margin account. Suppose the price of the wheat futures contract rises to $3.35 per bushel by the end of the trading day, will the price lead to a margin call? If so, how much money will go into (or out of) her margin account? Note: the size of the wheat futures contract is 5,000 bushels.

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Financial Management, Finance

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