Given a 5,000 Bushel Futures Contract on Grain at a Price

question 53

Short Answer

Given a 5,000 bushel futures contract on grain at a price of $3.25 per bushel, a margin requirement of 5%, and a maintenance margin of 80%, your customer wants to know (for a single contract) how much would the price per bushel have to fall before additional margin would be required?

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Definitions:

Ketone

An organic compound characterized by a carbonyl group (C=O) bonded to two carbon atoms.

Acetone

A colorless, volatile, and flammable liquid used as a solvent, known chemically as propan-2-one or dimethyl ketone.

Carbon Atoms

The basic building blocks of organic compounds, characterized by four valence electrons allowing for various bonding configurations.

Carbonyl Group

A functional group consisting of a carbon atom double-bonded to an oxygen atom (C=O).