Long position in soybean futures

Assignment Help Financial Management

Reference no: EM131346862

1. You have a long position in soybean futures at $4.75 per bushel. The contract is for 5,000 bushels, and initial margin is $1,215. Maintenance margin is $900. An unexpected late frost destroys newly planted crops in the Midwestern United States, and the futures price rises to $5.20 per bushel over the next few trading days. Which of the following results is most likely?

A. You receive a margin call from your broker. B. The futures exchange imposes a temporary hold on trading in soybean futures. C. The contract value rises to $25,000. D. The contract value rises $2,250.

2. You enter a short position in an oats futures contract. The trading unit is 5,000 bushels, the futures price is $1.08 per bushel, initial margin is $270, and maintenance margin is $200. The futures price rises $.02 to $1.10 on projections of poor yields. What is the most likely result?

A. You consider closing your position to capitalize on a $100 profit. B. You get a margin call for $70. C. You get a margin call for $100. D. The long position exercises the futures contract.

Reference no: EM131346862

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