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Farmer Bob is concerned about the plantin so he hedged this position with a Sept...

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Accounting

Farmer Bob is concerned about the plantin so he hedged this position with a Sept 21 futures contract on wheat. The initial and maintenance margins on wheat futures are $1,485 and $1,350 respectively. Each contract is on 5,000 bushels. a. Did he go long or short? why? b. Complete the following marked-to-market chart. Be sure to indicate any margin calls.

Day

Settlement

Price (per Bushel)

Cash Flow

Margin Account Balance

Margin Call?

0

.53

1

.57

2

.59

3

.43

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