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Tom buys two July futures contracts on frozen orange juice. Each contract is for the delivery...

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Finance

Tom buys two July futures contracts on frozen orange juice. Eachcontract is for the delivery of 15,000 pounds. The current futuresprice is 160 cents per pound, the initial margin is $6,000 percontract, and the maintenance margin is $4,500 per contract. Whatprice change would lead to a margin call? Under what circumstances$2,000 could be withdrawn from the margin account?

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Transcribed Image Text

Tom buys two July futures contracts on frozen orange juice. Eachcontract is for the delivery of 15,000 pounds. The current futuresprice is 160 cents per pound, the initial margin is $6,000 percontract, and the maintenance margin is $4,500 per contract. Whatprice change would lead to a margin call? Under what circumstances$2,000 could be withdrawn from the margin account?

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