The Purpose of a Margin Account for a Futures Contract

question 44

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.

---

Definitions:

Permutation

A permutation is an arrangement of all or part of a set of objects, with regard to the order of the arrangement.

Income

Financial gain accumulated over a period, such as wages from employment, profits from investments, or returns from assets.

Bootstrap Confidence Interval

A method for estimating the confidence interval of a parameter by resampling with replacement from an original dataset and calculating the interval from the bootstrap samples.

Bias

A systematic error or deviation from the true value in data collection or analysis, which can lead to false conclusions.