What price wheat must change in order for get a margin call

Reference no: EM133256192

Assignment:

Chicago Board of Trade (CBOT, and now part of CME group) Wheat Future contracts are for minimum 5000 bushels with exercise (future, contract) price of a bushel expressed in cents. The exchange usually issues contracts for March, May, July, September and December. Suppose you long 10 December 2022 contracts with exercise price of 8304 cents. You are required to deposit 7.5% of the value of the contracts in a margin account. Maintenance Requirement or Margin Maintenance for each contract is $3300.

a) Suppose the price of June wheat drops to 830 cents per bushel. What will be the balance in your margin account?

b) To what price wheat must change in order for you to get a margin call?

Reference no: EM133256192

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