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?