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Finding the dollar amount of the maintenance margin

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An American company sells yen futures contracts to cover possible exchange losses on its export orders denominated in Japanese yen. The amount of the initial margin is $20,000, and the maintenance margin is 75 percent of the initial margin. The value of the company's position declines by $6,000 because the spot rate for yen has increased. What is the dollar amount of the maintenance margin?

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Solution depicts the steps to calculate the dollar amount of the maintenance margin in the given case.

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What is the dollar amount of the maintenance margin?

Maintenance Margin=75% of initial ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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