Question

A company enters into a short futures contract to sell 25,000 units of a commodity for...

A company enters into a short futures contract to sell 25,000 units of a commodity for 950 cents per unit. The initial margin is $4,500 and the maintenance margin is $3,750.

Part a. Calculate the futures price per unit above which there will be a margin call.

Part b. Calculate the amount that has to be deposited in response to the margin call to maintain the account.

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