On Monday morning you sell one June T-bond futures contract at 97:27 or for $97,843.75. The contract's face value is $100,000. The initial margin requirement is $2,700 and the maintenance margin requirement is $2,000 per contract. Use the following price data to answer questions 67 through 70.
-After Monday's close the balance on your margin account will be ________.

Question

On Monday morning you sell one June T-bond futures contract at 97:27 or for $97,843.75. The contract's face value is $100,000. The initial margin requirement is $2,700 and the maintenance margin requirement is $2,000 per contract. Use the following price data to answer questions 67 through 70. 
-After Monday's close the balance on your margin account will be ________.

Quizplus · Accepted Answer

To calculate the balance on your margin account, you need to first calculate the gain or loss on the futures contract.

The contract was sold at 97:27 and the settlement price on Monday was 97:18, which means the contract lost 9 ticks or $281.25 (1 tick = $31.25).

The initial margin requirement is $2,700, so the balance on your margin account after the trade will be $2,700 - $281.25 = $2,418.75.

However, the maintenance margin requirement is $2,000 per contract. Since the balance on your margin account is less than this requirement, you will receive a margin call for the difference, which is $418.75.

Therefore, the balance on your margin account after Monday's close will be $2,700 - $281.25 + $418.75 = $2,837.50.

The only answer choice that matches this calculation is C.

On Monday Morning You Sell One June T-Bond Futures Contract