With Regard to Futures Contracts, What Does the Word "Margin

question 16

Multiple Choice

With regard to futures contracts, what does the word "margin" mean?

• A) It is the amount of the money borrowed from the broker when you buy the contract.
• B) It is the maximum percentage that the price of the contract can change before it is marked to market.
• C) It is the maximum percentage that the price of the underlying asset can change before it is marked to market.
• D) It is a good-faith deposit made at the time of the contract's purchase or sale.
• E) It is the amount by which the contract is marked to market.

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Definitions:

Terminate Contractual Duties

The act of formally ending obligations stipulated in a contract by mutual agreement or as allowed by the contract terms.

Perfect Performance

The fulfillment of all obligations in a contract in the manner that was specified and agreed upon by the parties involved.

Complete

To finish all parts of a task or duty fully and to satisfaction.

Contract Condition

A provision in a contract that specifies a requirement or event that must occur or be met for the contract or a part of it to be fulfilled or enforced.