A Futures Exchange Imposes an Initial Margin

question 92

Multiple Choice

A futures exchange imposes an initial margin:

• A) as the exchange needs to make a profit.
• B) as it gives the client trader more leverage.
• C) to ensure brokers and traders are able to pay for any losses incurred over the life of the futures contract.
• D) the exchange wants to ensure that futures contracts are closed-out.

---

Definitions:

Gain-Sharing Plan

A compensation strategy where employees receive financial benefits from improvements in the company's performance, encouraging productivity and team effort.

Skill-Based Pay

A compensation system that determines salaries based on the skills or knowledge an employee possesses, rather than their job position or title.

Compensation Costs

Compensation costs are the total expenses that an employer spends on an employee's wages, benefits, and other forms of remuneration.

Cross-Training

A training technique in which individuals or team members learn different skills or roles to enhance versatility and understanding across functions.