The Purpose of a Margin Account for a Futures Contract

question 97

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 simultaneously.
• C) provide a cushion for the exchange against defaults on the contract.
• D) hold interest payments until expiration.

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Definitions:

Linear

Pertaining to or resembling a line; involving a sequence of events or elements that proceed in a straight or direct path with no deviations.

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Moderately Strong Association

An intermediate level of correlation between two variables, indicating a significant but not perfect relationship.