# Could anyone show me the answer (with calculation)

An investor enters a short position in July wheat futures contract for 5000 bushels at \$4/bushel. Suppose the initial margin is 5%. How much money will she have in her futures account at the end of the second day if the closing price at first day was \$4.1 and the price at the end of the second day was \$3.95? Assume the maintenance margin is 65% of initial margin, the investor doesn’t withdraw money from her account in period 1, and all futures positions are cleared at the end of the day.

Rating

Contract value = 5000 x \$4 = 20,000

INitial margin = \$20,000 x 5% = \$1,000

Maintenance margin = 1,000 x 65% = \$650

Profit /loss (day 1) = 5000 x (\$4-4.1) = \$500

Money left (day 1) = \$1000 - \$500 = \$500

==> additional cash deposit of of \$150 ( back to maintenance margin \$650)

Profit / loss (day 2) = 5000 x (4.1-3.95) = \$750

ney left (day 2) = \$750+\$650 = \$1400 (include \$1000 initial margin, \$250 profit and \$150 additional margin on day 1)