Logan Sold a Corn Futures Contract Using the Initial Margin

question 12

Multiple Choice

Logan sold a corn futures contract using the initial margin of $2,700. His maintenance margin is $2,000. The price of corn began to rise in early summer, but Logan wants to keep his contract. When his margin falls below $2,000 (minimum maintenance)

• A) his contract will be automatically sold or canceled.
• B) he does not need to do anything since the most he can lose is $2,700.
• C) he will need to deposit enough money in his margin account to bring the balance up to $2,000.
• D) he will need to deliver the corn immediately.

Be able to interpret and analyze shifts in demand curves resulting from changes in prices, incomes, or other factors.

Ability to construct and interpret Engel curves for different types of goods based on consumer income and quantity demanded.

Comprehend the implications of goods being classified as normal goods or inferior goods on consumer purchasing behavior.

Understand elasticity of demand and its impact on consumer spending and seller's revenue.

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Definitions:

Qualitative Model

A framework for analysis that uses non-numeric data to understand patterns, concepts, opinions, or experiences.

Demand Forecast

The estimation of the quantity of a product or service that consumers will purchase in the foreseeable future.

Regression Analysis

A method in statistics employed to explore how a dependent variable interacts with one or several independent variables.

Time Series Design

A research design that involves repeated observations of the same variables over short or long periods of time.