Your Broker Requires an Initial Margin of $2,500 and a Maintenance

question 52

Multiple Choice

Your broker requires an initial margin of $2,500 and a maintenance margin of $1,500 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 112′165 yesterday. Today, the settlement quote is 111′105. Your margin balance at yesterday's close was $2,100. 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 $1,100.50
• C)call for $1,287.50
• D)call for $1,587.50
• E)call for $1,775.00

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Definitions:

U.S. Tariff

A tax imposed by the United States government on imported goods to protect domestic industries or to generate revenue.

Oil

A fossil fuel in liquid form, primarily used for energy production and as a raw material in chemicals manufacturing.

Domestic Quantity

Refers to the total amount of a good or service produced within a country's borders, irrespective of the production entity's nationality.

Demanded

Describes the quantity of a good or service that consumers are willing and able to purchase at a given price at a specific time.