The Margin Deposit Associated with the Purchase of a Futures

question 5

Multiple Choice

The margin deposit associated with the purchase of a futures contract

• A) is a partial payment on the contract with the amount of the payment equal to 10% or more of the contract value.
• B) represents the purchasers equity in the contract with the balance of the contract financed with borrowed funds at the margin rate of interest.
• C) is related to the value of the item underlying the contract.
• D) is used to cover any loss in market value of the contract resulting from adverse price fluctuations.