Margin Accounts Have the Effect of

question 16

Multiple Choice

Margin accounts have the effect of

• A) Reducing the risk of one party regretting the deal and backing out
• B) Ensuring funds are available to pay traders when they make a profit
• C) Reducing systemic risk due to collapse of futures markets
• D) All of the above

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Definitions:

GAAP

An aggregation of universally recognized rules and standards in accounting for presenting financial information.

Non-Interest-Bearing Note

A type of promissory note that does not accrue interest over its life, with the borrower repaying only the principal amount borrowed.

Net Carrying Value

The current book value of an asset or company after subtracting total liabilities from total assets.