Farmer Bob is concerned about the plantin so he hedged this position with a Sept...
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Farmer Bob is concerned about the plantin so he hedged this position with a Sept 21 futures contract on wheat. The initial and maintenance margins on wheat futures are $1,485 and $1,350 respectively. Each contract is on 5,000 bushels. a. Did he go long or short? why? b. Complete the following marked-to-market chart. Be sure to indicate any margin calls.
Day
Settlement
Price (per Bushel)
Cash Flow
Margin Account Balance
Margin Call?
0
.53
1
.57
2
.59
3
.43
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