Question

An investor takes a short position in three corn futures contracts (5,000 bushels each) at a price of 350 cents per bushel. The initial margin is $1,750 per contract and the maintenance margin is $1,300 per contract. Track the margin account balance over the next five days given the following information. You should assume that the investor makes any necessary deposit in the event of a margin call.

	Settlement Price	Daily Gain	Account Balance	Margin Call
1	348
2	353
3	357
4	360
5	355

Answer 1

An investor takes a short position in three corn futures contracts (5,000 bushels each) at a price of 350 cents per bushel. The initial margin is $1,750 per contract

The maintenance margin is $1,300 per contract.

The margin account balance over the next five days

Day	Settlement Price	Daily Gain	Account Balance	Margin Call
1	348	10,000	13,050	-
2	353	- 25,000	-11,950	13,250
3	357	-20,000	-6,750	5,450
4	360	-15,000	-9,550	10,900
5	355	25,000	35,900	-