Question

Suppose that on Monday, 7 July, you assume a long position in one December British pound futures contract at the futures price of $1.10/£. The initial margin is $2,000, and the maintenance margin is $1,500. The contract size is £125,000. Assume you do not withdraw excess money from your margin balance. All margin requirements are met with cash. The settlement prices for Monday and the next two days are shown in the following: Monday: $1.10 Tuesday: $1.15 Wednesday: $1.07 What is the balance in your margin account at the end of Wednesday?

Answer 1

	Initial Account value =(1.1*125000)	$137,500
	Initial Margin	$2,000
	Margin Loan	$135,500
		X($/GBP)	A=X*125000	B	C=A-B	D	E=C-D
		Current future Price	Account Value	Margin Loan	Account Equity	Maintenance Margin	Marging excess/(Defficiency)
	Monday	$1.10	$137,500	$135,500	$2,000	$1,500	$500
	Tuesday	$1.15	$143,750	$135,500	$8,250	$1,500	$6,750
	Wednesday	$1.07	$133,750	$135,500	($1,750)	$1,500	($3,250)
	Balance in Margin Account on Wednesday	($1,750)