2. a. Assume Company A took a long position of five June beans futures contracts, each of which covers 5,000 bushels of

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2 A Assume Company A Took A Long Position Of Five June Beans Futures Contracts Each Of Which Covers 5 000 Bushels Of 1 (30.44 KiB) Viewed 44 times

2. a. Assume Company A took a long position of five June beans futures contracts, each of which covers 5,000 bushels of beans. Current price is $2.00/bushel and each contract requires an initial margin deposit of $150 and a maintenance margin of $100. Explain the margin account & marking-to-market requirements in the futures market. Why is it important to maintain this requirement for futures transactions ? Explain and calculate the margin balance after a $0.02 price drop on Day 1, $0.01 price increase on Day 2, and $0.01 price decrease on Day 3. Describe briefly how to terminate a futures contract at or before expiration. b. c. c