A company enters into a long futures contract to buy 1,000 units of a commodity for $60 per unit. The initial margin is $6,000 and the maintenance margin is $4,000 . What futures price will allow $2,000 to be withdrawn from the margin account?
A. $58
B. $62
C. $64
D. $66
B
Amounts in the margin account in excess of the initial margin can be withdrawn. Each $1 increase in the futures price leads to a gain of $1000 . When the futures price increases by $2 the gain will be $2000 and this can be withdrawn. The futures price is currently $60 . The answer is therefore $62 .
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