Which One of the Following Describes the Typical Initial Margin

question 18

Multiple Choice

Which one of the following describes the typical initial margin requirements for a futures contract?

• A) 2 to 5 percent of contract value on short positions only
• B) 2 to 5 percent of contract value on both long and short positions
• C) 4 to 8 percent of contract value on long positions only
• D) 4 to 8 percent of contract value on short positions only
• E) 5 to 15 percent of contract value on both long and short positions

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Definitions:

Overhead Costs

Expenses associated with the day-to-day running of a business that are not directly linked to the production or selling of goods and services.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and considered a part of the product’s cost.

Direct Labor

The labor costs directly associated with the production of goods, including wages for workers who are involved in the actual manufacturing process.

Allocation Base

A measure or statistic used to distribute indirect costs to different cost objects, such as departments or products.