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Will the trader get a margin call if the futures price

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As a financial analyst at Deutsche Bank, NY, you are helping your client with futures hedging. Your client enters into a long position in futures contract to buy 5,000 bushels of wheat for $6.50 per bushel. The initial margin is $3,000 and the maintenance margin is $2,000. Your client will be allowed to withdraw any balance in the margin account in excess of the initial margin and the company will get a margin call if the balance is going below the maintenance margin. a. Will the trader get a margin call if the futures price goes to $6.14? b. What will be the price that will trigger a margin call of $2,500? C. What will be the price that will allow you to withdraw just $2,500 from the margin account?

Reference no: EM133250577

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