As Part of Futures Trading,exchanges Have Traders Place an Initial

question 67

Multiple Choice

As part of futures trading,exchanges have traders place an initial margin with its clearing house because:

• A) as the exchange has to cover its costs.
• B) as it acts like a performance bond to support the value of the futures contract.
• C) the exchange wants to ensure that brokers make profits.
• D) the exchange wants to ensure that futures contracts can be closed-out.