Which of the Below Statements Is FALSE

question 41

Multiple Choice

Which of the below statements is FALSE?

• A) Maintenance margin is the minimum level (specified by the exchange) to which an investor's equity position may fall as a result of an unfavorable price movement before the investor is required to deposit additional margin.
• B) Unlike initial margin, the variation margin must be in cash rather than interest-bearing instruments.
• C) When securities are acquired on margin, the difference between the price of the security and the initial margin is loaned from the broker.
• D) A party taking a position in a futures contract need not put up the entire amount of the investment.

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Definitions:

Gross Profit

The financial metric representing the difference between revenue and the cost of goods sold, before accounting for other expenses.

Vertical Analysis

A financial statement analysis method where each entry for each of the three major categories of accounts (assets, liabilities, and equities) in a balance sheet is represented as a proportion of the total account.

Cost Of Goods Sold

Refers to the total expense directly related to the production of goods or services a company sells.