A trader buys two July futures contracts on frozen orange juice. Each contract i

Question

A trader buys two July futures contracts on frozen orange juice. Each contract is for the delivery of 15,000 pounds. The current futures price is 160 cents per pound, the initial margin is $6,000 per contract, and the maintenance margin is $4,500 per contract. What price change would lead to a margin call? Under what circumstances could $2,000 be withdrawn from the margin account? 1. If countries are first ranked by level of real GDP per capita, and then by the value of the Human Development Index, would you expect the ranking of countries to be similar or different? Explain 2.

Explanation / Answer

2) The ranking of the countries would be different because the human development index is a composite index of life expectancy, adult literacy and years of schooling , and the Real GDP per capita.

The real GDP per capita is a measurement of a standard of living based on the purchasing power parity in terms of dollars. Thus countries that are ranked high on real GDP per capita may be ranked low on human development index as there could be differences in life expectancy, adult literacy and years of schooling .

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