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

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Definitions:

Depressant

A substance that reduces the functioning of the nervous system, often used to decrease anxiety and induce sleep.

Stimulant

A substance that raises levels of physiological or nervous activity in the body, often used to increase alertness or physical performance.

Social Pressure

The influence exerted by society or a social group on individuals to conform to certain behaviors, beliefs, or standards.

Addictive

Characterized by a compulsive, sometimes uncontrollable, craving for a substance or activity despite potential harm to the individual's health or well-being.