Will purchased 3 futures contracts on corn. The contract size is 5,000 bushels and the price is quoted in cents per bushel. Assume the initial margin requirement is 4.5% of the contract value. What is the amount of the initial margin if the futures quote is 624?
A)$140.40
B)$421.20
C)$1,404
D)$2,808
E)$4,212

Question

Quizplus · Accepted Answer

The contract value is 5,000 bushels * 624 cents = 3,120,000 cents or $31,200 per contract. For 3 contracts, it's $93,600. The initial margin is 4.5% of $93,600, which is $4,212.

Will Purchased 3 Futures Contracts on Corn