Answer :
The variation margin would be $2,400. The variation margin is the amount that is added or subtracted from your account balance based on the change in the futures contract's price.
In this case, you purchased 3 CME April 2020 Live Cattle futures contracts at 120 cents per pound. The difference in price is 122 - 120 = 2 cents per pound. So, the variation margin would be 2 cents/pound * 40,000 pounds/contract * 3 contracts = 240,000 cents.
To convert this to dollars, we divide by 100 cents/dollar: 240,000 cents / 100 cents/dollar = $2,400. Therefore, your account balance would be adjusted by $2,400 as the variation margin.
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