Question

Yesterday, you entered into a futures contract to buy €62,500 at $1.50/€. Your initial margin was $3,750 (= 0.04 × €62,500 × $1.50/€ = 4 percent of the contract value in dollars). Your maintenance margin is $2,000 (meaning that your broker leaves you alone until your account balance falls to $2,000). At what settle price (use 4 decimal places) do you get a margin call? Multiple Choice $1.4720/€ $1.5280/€ $1.500/€ none of the options

Answer 1

$1.4720/€

Step-by-step explanation:

To get a margin call, you have to lose

($3,750 - $2,000) =$1,750

= ($1.50 - Pmc) ×62,500 Pmc

= $1.4720 / €

Therefore the margin call settle price is $1.4720 / €