CFA Institute CFA-Level-I Exam - Topic 1 Question 13 Discussion

Actual exam question for CFA Institute's CFA-Level-I exam

Question #: 13
Topic #: 1

[All CFA-Level-I Questions]

A trader has a long position in a wheat contract.

What is the price at which the trader will receive a maintenance margin call?

A$1.90.

B$2.05.

C$2.25.

D$1.75.

Show Suggested Answer

Suggested Answer: D

by Amalia at Mar 07, 2025, 01:47 AM

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Stephen

4 months ago

Yeah, $2.05 makes the most sense to me!

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Harley

4 months ago

Wait, how can it be $1.90? That seems off.

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Hyun

4 months ago

I think $1.90 sounds right.

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Golda

5 months ago

Definitely not $2.25, that's way too high!

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Alba

5 months ago

I'm pretty sure it's $1.75.

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Garry

5 months ago

I think I saw something about maintenance margins being triggered at about $2.05 in a similar question, but I need to double-check that.

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Earleen

5 months ago

I feel like $1.75 could be a reasonable guess since it's lower than the initial margin, but I might be mixing it up with another commodity.

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Nobuko

5 months ago

I remember a practice question where the maintenance margin was around $2.00, but I can't recall the specifics for wheat.

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Luisa

6 months ago

I think the maintenance margin is usually set below the initial margin, but I'm not sure what the exact price would be here.

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Charlena

6 months ago

I've got this! The maintenance margin is typically set at 75% of the initial margin requirement. So if I can figure out the initial margin, I can calculate the maintenance margin level.

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Maira

6 months ago

Okay, let me think this through step-by-step. The question says the trader has a long position, so I need to look at the downside risk and determine the price level that would trigger a margin call.

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Helaine

6 months ago

Hmm, I'm a bit unsure about this one. I know maintenance margin has to do with the minimum amount of equity required to keep a position open, but I'm not sure how to calculate the exact price level.

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Douglass

6 months ago

This looks like a straightforward question about maintenance margin calls. I'll need to recall the formula for calculating the maintenance margin level.

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Antonette

12 months ago

I remember studying this, and I'm pretty sure it's $1.75. That's the price for a maintenance margin call.

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Benedict

12 months ago

I'm not sure, but I think it might be $1.90. Can someone confirm?

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Minna

12 months ago

This question is a piece of cake! A trader long in wheat would get a margin call if the price drops below the maintenance level. Easy peasy, lemon squeezy.

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Kenneth

11 months ago

C) $2.25.

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Glendora

11 months ago

The trader will receive a maintenance margin call if the price drops below the maintenance level.

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Mozell

11 months ago

A) $1.90.

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Ernie

1 year ago

I believe it's $2.25. That's the price at which the trader will receive a maintenance margin call.

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Mona

1 year ago

C) $2.25 sounds about right. The maintenance margin is typically set at a level to provide a buffer before the position becomes too risky.

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Nida

12 months ago

C) That's correct, the maintenance margin call would be at $2.25.

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Hannah

12 months ago

B) $2.25 is the correct answer.

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Hana

12 months ago

A) $2.25.

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Brice

1 year ago

D) $1.75 seems too low. The maintenance margin call would be triggered at a higher price to give the trader a chance to add more funds before getting liquidated.

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Mary

1 year ago

I think the answer is B) $2.05. That's the point where the trader's position would be under-margined and they'd need to add more funds to their account.

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