Archer daniels midland decides to short 5 wheat futures, Financial Management

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Archer daniels midland decides to short 5 wheat futures

Archer Daniels Midland decides to short 5 wheat futures contracts with each contract covering, 5,000 bushels of wheat for 283 cents per bushel in order to hedge its operation. The initial margin is $7, 200 per contract and the maintenance margin is $5, 400 per contract. What price change would lead to a margin call? Under what circumstances could $2, 850 be withdrawn from the margin account?

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Financial Management: Archer daniels midland decides to short 5 wheat futures

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Financial Management: Archer daniels midland decides to short 5 wheat futures

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