Question

You have a long position in one soybean futures contract. The initial margin was $3,250 and the maintenance margin is $1,750. At the close of trading yesterday, the futures price was $8.03 per bushel and the balance in your margin account was $4,500. Today, the settlement price for soybean futures is $7.43. Will you receive a margin call and what deposit will you be required to make? a. $1,750 b. $2,750 c. $2,250 d. no margin call; $0

Name: you have a long position in one soybean futures contract the initial margin was 3250 and the maintenance margin is 1750 at the close of trading yesterday the futures price was 803 per bushel 10048
Uploaded: 2023-03-31T08:06:16-08:00
Duration: 2 min 14 s
Channel: Jennifer Stoner
Description: you have a long position in one soybean futures contract the initial margin was 3250 and the maintenance margin is 1750 at the close of trading yesterday the futures price was 803 per bushel 10048

          You have a long position in one soybean futures contract. The
initial margin was $3,250 and the maintenance margin is $1,750. At
the close of trading yesterday, the futures price was $8.03 per
bushel and the balance in your margin account was $4,500. Today,
the settlement price for soybean futures is $7.43. Will you receive
a margin call and what deposit will you be required to make?
a. $1,750
b. $2,750 
c. $2,250
d. no margin call; $0

Added by Lisa O.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Jennifer Stoner

03/31/2023

Step 1

The price decreased from $8.03 to $7.43, which is a decrease of $0.60 per bushel. Since you have a long position, this decrease in price results in a loss for you. The size of one soybean futures contract is 5,000 bushels, so your total loss is $0.60 * 5,000 = Show more…

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You have a long position in one soybean futures contract. The initial margin was $3,250 and the maintenance margin is $1,750. At the close of trading yesterday, the futures price was $8.03 per bushel and the balance in your margin account was $4,500. Today, the settlement price for soybean futures is $7.43. Will you receive a margin call and what deposit will you be required to make? a. $1,750 b. $2,750 c. $2,250 d. no margin call; $0