A company enters into a long futures contract to buy 1,000 units of a commodity for $60 per unit.The initial margin is $6,000 and the maintenance margin is $4,000.What futures price will allow $2,000 to be withdrawn from the margin account?
A) $58
B) $62
C) $64
D) $66

Question

Quizplus · Accepted Answer

Amounts in the margin account in excess of the initial margin can be withdrawn.Each $1 increase in the futures price leads to a gain of $1000.When the futures price increases by $2 the gain will be $2000 and this can be withdrawn.The futures price is currently $60.The answer is therefore $62.

A Company Enters into a Long Futures Contract to Buy