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CMA Final · Strategic Financial Management · Forwards and Futures

A trader buys 10 lots of a stock futures contract (lot size 500) at ₹200. Initial margin is ₹20,000 per lot and maintenance margin is ₹15,000 per lot. Daily settlement closes: Day 1 at ₹197, Day 2 at ₹194. Assuming no other movement, what is the total margin call, per the usual rule that the account is restored to initial margin, issued at the end of Day 2?

No margin call arises, so this question is flawed.

  1. A₹1,50,000 on Day 2 onlyCorrect
  2. B₹1,00,000 on Day 2 only
  3. C₹2,00,000 on Day 2 only
  4. D₹3,00,000 on Day 2 only

Explanation

Per lot loss: Day 1 = 3 x 500 = ₹1,500, balance 18,500 (above 15,000, no call). Day 2 loss another ₹1,500, balance 17,000, still above 15,000, so no call arises at all by this reading; the question asks the call under the rule, but total loss over two days is ₹3,000 per lot. Rechecking: with 10 lots the balance is ₹1,70,000 vs maintenance ₹1,50,000, so no call; this option set therefore cannot be justified.

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