Your Broker Requires an Initial Margin of $1,500 and a Maintenance

question 77

Multiple Choice

Your broker requires an initial margin of $1,500 and a maintenance margin of $1,000 on Treasury note futures. Treasury note futures contracts are based on a $100,000 par value and quoted in points and one-half of 1/32 of a point. You own one Treasury futures contract that had a closing settlement quote of 113′245 yesterday. Today, the settlement quote is 112′265. Your margin balance at yesterday's close was $1,150. All margin calls restore margin levels to their initial level. Will you receive a margin call based on today's settlement quote and, if so, for what amount?

• A)no margin call
• B)call for $1,037.50
• C)call for $937.50
• D)call for $1,100
• E)call for $1,287.50

---

Definitions:

Partners' Equity

The total value of capital contributed by partners and the accumulated profits of a partnership firm, minus any withdrawals.

Investment Error

Mistakes made in the process of investing capital, which can range from calculation errors to misunderstanding an investment's risks.

Capital Balance

The Capital Balance represents the amount of money that owners have invested in a business minus any withdrawals. It indicates the financial stake of the owners in the business.

Profits and Losses

Financial gains or deficits that a business experiences, typically shown in an income statement.