An Investor Enters into a Long Position in 10,000 Futures

question 37

Multiple Choice

An investor enters into a long position in 10,000 futures contracts of oil with a $50,000 initial margin and has a maintenance margin that is 75% of this amount.The futures price associated with this contract is $100.Assuming the price of the underlying asset decreases to $98, what is the margin call?

• A)$50,000
• B)$37,500
• C)$7,500
• D)No margin required

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Definitions:

Odd-even Reliability

A measure of internal consistency reliability, where a test is split into odd and even items and the scores are correlated.

Construct Validity

The degree to which a test measures what it claims to be measuring, specifically in terms of whether the test actually assesses the theoretical construct it is designed to measure.

Predictive Validity

The level at which a score from a test or scale forecasts subsequent performance on a connected result.

Content Validity

Refers to the extent to which a test measures an intended content area.