Financial Risk Manager Part 1

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Explanation:

The correct answer is C: July 1, July 2 and July 7 only.

Explanation (Step-by-Step Margin Account Tracking)

John's position: Long 2 December silver futures contracts (note: the question says "gold" once but the table and contract details clearly refer to silver futures).

Contract size: 5,000 ounces per contract → Total position size = 10,000 ounces.
Purchase price (June 29): USD 18.62/oz.
Initial margin = USD 6,000 (deposited at the start).
Maintenance margin = USD 4,500.

A margin call occurs on any day when the margin account balance falls below the maintenance margin of $4,500. The daily gain/loss is credited/debited to the margin account at the end of each trading day (marked-to-market).

Here is the day-by-day calculation of the margin account balance:

Day	Futures Price	Daily Gain/Loss	Margin Balance	Below `$4`,500?	Margin Call?
June 29	18.62	0	6,000	No	No
June 30	18.69	+700	6,700	No	No
July 1	18.03	-6,600	100	Yes	Yes
July 2	17.72	-3,100	-2,900	Yes	Yes
July 6	18.00	+2,800	-100	Yes (still below)	No (already called previously; no new call unless restored and drops again)
July 7	17.70	-3,000	-3,100	Yes	Yes
July 8	17.60	-1,000	-4,100	Yes	No (no new call)

Key Points on Margin Calls

Margin calls are triggered only on the days the balance first drops below maintenance (or drops below again after being restored to initial margin).
After the margin call on July 1, the account is deeply underwater. The further loss on July 2 keeps it below maintenance → another call.
On July 6, the gain of +$2,800 improves the balance but does not bring it back to the initial margin level of $6,000. Therefore, no variation margin is required to "reset," and the account remains below maintenance (no additional call triggered).
The loss on July 7 causes the balance to drop further below maintenance → a new margin call.
The small additional loss on July 8 does not trigger a separate new call (the account was already below maintenance).

Thus, John receives margin calls on July 1, July 2, and July 7 only.

Answer: C
This is a classic FRM Part 1 futures/margining question testing understanding of daily settlement, maintenance margin triggers, and when repeated calls occur.

Explanation:

The correct answer is C: July 1, July 2 and July 7 only.

Explanation (Step-by-Step Margin Account Tracking)

John's position: Long 2 December silver futures contracts (note: the question says "gold" once but the table and contract details clearly refer to silver futures).

Contract size: 5,000 ounces per contract → Total position size = 10,000 ounces.
Purchase price (June 29): USD 18.62/oz.
Initial margin = USD 6,000 (deposited at the start).
Maintenance margin = USD 4,500.

Here is the day-by-day calculation of the margin account balance:

Day	Futures Price	Daily Gain/Loss	Margin Balance	Below `$4`,500?	Margin Call?
June 29	18.62	0	6,000	No	No
June 30	18.69	+700	6,700	No	No
July 1	18.03	-6,600	100	Yes	Yes
July 2	17.72	-3,100	-2,900	Yes	Yes
July 6	18.00	+2,800	-100	Yes (still below)	No (already called previously; no new call unless restored and drops again)
July 7	17.70	-3,000	-3,100	Yes	Yes
July 8	17.60	-1,000	-4,100	Yes	No (no new call)

Key Points on Margin Calls

Margin calls are triggered only on the days the balance first drops below maintenance (or drops below again after being restored to initial margin).
After the margin call on July 1, the account is deeply underwater. The further loss on July 2 keeps it below maintenance → another call.
On July 6, the gain of +$2,800 improves the balance but does not bring it back to the initial margin level of $6,000. Therefore, no variation margin is required to "reset," and the account remains below maintenance (no additional call triggered).
The loss on July 7 causes the balance to drop further below maintenance → a new margin call.
The small additional loss on July 8 does not trigger a separate new call (the account was already below maintenance).

Thus, John receives margin calls on July 1, July 2, and July 7 only.

Answer: C
This is a classic FRM Part 1 futures/margining question testing understanding of daily settlement, maintenance margin triggers, and when repeated calls occur.

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In late June, John purchased two December gold futures contracts. Each contract size is 5,000 ounces of silver and the futures price on the date of purchase was USD 18.62 per ounce. The required initial margin is USD 6,000 and a maintenance margin of USD 4,500.

You are given the following price history for the December silver futures:

Day Futures Price Daily Gain
June 29 18.62 0
June 30 18.69 700
July 1 18.03 -6600
July 2 17.72 -3100
July 6 18.00 2800
July 7 17.70 -3000
July 8 17.60 -1000

On which days did John receive a margin call?

Day	Futures Price	Daily Gain
June 29	18.62	0
June 30	18.69	700
July 1	18.03	-6600
July 2	17.72	-3100
July 6	18.00	2800
July 7	17.70	-3000
July 8	17.60	-1000

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Last updated: May 12, 2026 at 18:29

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July 1 only

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July 1 and July 2 only