Your Broker Requires an Initial Margin of $6,100 Per Futures

question 69

Multiple Choice

Your broker requires an initial margin of $6,100 per futures contract on wheat and a maintenance margin of $4,400 per contract. Wheat futures contracts are based on 5,000 bushels and quoted in cents per bushel. You sold one wheat futures contract yesterday at the closing settlement price quote of 780. Today, the settlement quote is 802. Will you receive a margin call and, if so, for what amount? All margin calls restore the margin level to its initial level.

• A)no margin call
• B)call for $475
• C)call for $1,100
• D)call for $4,750
• E)call for $11,000

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Definitions:

Habituation

A psychological learning process wherein there is a decrease in response to a stimulus after being repeatedly exposed to it.

Acquisition Behavior

A behavioral psychology term referring to the process of learning new behaviors, often through conditioning.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired: a response which is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.

Ivan Pavlov

A Russian physiologist known for his research on classical conditioning, demonstrating how organisms can learn to associate neutral stimuli with reflexive responses.