In Relation to Futures Markets,which of the Following Regarding Initial

question 3

Multiple Choice

In relation to futures markets,which of the following regarding initial margins is false?

• A) A futures trader is required to pay an initial margin to the clearinghouse.
• B) The initial margin will be higher for low market volatility.
• C) If the futures contract price drops below the minimum percentage, the initial margin will have to be increased.
• D) In order to top up an insufficient initial margin a maintenance margin call will be made.

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Definitions:

International Trade

The exchange of goods and services between countries, driven by comparative advantages.

World Trade Organization

An international organization that regulates trade between nations to ensure that trade flows as smoothly, predictably, and freely as possible.

International Trade Agreements

Treaties in which a country promises to engage in less trade protection against the exports of other countries in return for a promise by other countries to do the same for its own exports.

Autarky

An economic condition or system in which a country is self-sufficient and does not engage in international trade.