The Purpose of a Margin Account for a Futures Contract

question 10

Multiple Choice

The purpose of a margin account for a futures contract is to:

• A)Guarantee a minimum margin of profit for the contract holder
• B)Allow futures traders to have more than one contract at once
• C)Provide a cushion for the exchange against defaults on the contract
• D)Hold interest payments until expiration

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Definitions:

Pleasure Principle

A psychoanalytic concept proposing that individuals seek immediate gratification to avoid discomfort, driving much of their behavior.

Reality Principle

A psychoanalytic concept describing the capacity to postpone gratification and operate according to the conditions of the external world.

Ego

In psychoanalysis, refers to the component of the personality that is responsible for dealing with reality, balancing the demands of the id and superego.

Neuroticism

A personality trait characterized by emotional instability, anxiety, moodiness, worry, and fear.