What Is the Purpose of an Initial Margin on a Futures

question 521

Multiple Choice

What is the purpose of an initial margin on a futures exchange?

• A) To cover losses incurred between variation margin payments
• B) To exclude retail investors
• C) To pay reserve requirements
• D) To cover fees due to the clearing house

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Definitions:

Chemical Bonds

The attractive forces that hold atoms together in compounds, resulting from the sharing or transferring of electrons.

Potential Energy

Stored energy in a potentially usable form, as a result of location or spatial arrangement.

Metabolic Pathways

Networks of chemical reactions occurring within a cell, guided by enzymes, that convert substrates into biological products, supporting life's processes.

Unorganized

Lacking orderly structure, arrangement, or coordination.