The Initial Margin Required for Futures Trading

question 45

Multiple Choice

The initial margin required for futures trading:

• A) is only put up by the seller.
• B) is only put up by the buyer.
• C) is put up by the party initiating the transaction, either the buyer or the seller.
• D) must be put up by both the buyer and the seller.

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Definitions:

Bad News Earnings

Reports of lower than expected earnings, often leading to a negative reaction in the stock market and a decrease in company’s share price.

Negative Earnings Surprise

An event where a company's reported earnings are below the expectations of analysts, often leading to a decline in its stock price.

Stock Returns

The income generated from the investment in shares, comprised of dividends received and capital gains or losses.

Exit Price Approach

A valuation method that determines the price a seller would receive to sell an asset or transferred liability.