1215

A trader has a long position in a wheat contract.

• The initial margin is $5,000.
• The maintenance margin is $3,750.
• There are 5,000 bushels in each wheat contract.
• On July 10, the price is $2.00 per bushel.

What is the price at which the trader will receive a maintenance margin call?

A) $2.25.

B) $1.90.

C) $1.75.

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The trader would have to lose $1,250, or 5,000 ? 3,750 before they get a margin call. 5,000(2.00 ? P) = 1,250. P = $1.75.