Your Broker Requires an Initial Margin of $6,075 Per Futures

question 29

Multiple Choice

Your broker requires an initial margin of $6,075 per futures contract on wheat and a maintenance margin of $4,500 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 786.Today,the settlement quote is 808.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:

Equivalent Amount

A quantity that is equal in value, power, or meaning to another, often used in financial contexts to compare different currencies or investment returns.

First Column

In a table or spreadsheet, the first column is typically the left-most column, often used for the primary category or indicator of each row.

Second Column

In a table or spreadsheet, it refers to the column positioned immediately after the first column.

Exchange Rates

The price at which one currency can be swapped for another.