The futures price of corn is $ 2.00. The contracts are for 10,000

| June 9, 2016

Question
The futures price of corn is $ 2.00. The contracts are for 10,000 bushels, so a contract is worth $ 20,000. The margin requirement is $ 2,000 a contract, and the maintenance margin requirement is $ 1,200. A speculator expects the price of the corn to fall and enters into a contract to sell corn.

a) How much must the speculator initially remit?

b) If the futures price rises to $ 2.13, what must the speculator do?

c) If the futures price continues to rise to $ 2.14, how much does the speculator have in the account?

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