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:

Registration Requirements

Legal or regulatory mandates that entities must fulfill to register a product, business, or activity with the relevant authorities.

Noninvestment Company

A company whose primary business involves activities other than investing, reinvesting, owning, holding, or trading in securities.

SEC Rule 10b-5

A rule of the Securities and Exchange Commission that prohibits the commission of fraud in connection with the purchase or sale of any security.

Inside Information

Privileged, non-public knowledge about the matters of a company that could provide an unfair advantage in financial trading or business decisions.