In the Futures Markets,a Maintenance Margin Call Refers To

question 20

Multiple Choice

In the futures markets,a maintenance margin call refers to:

• A) funds paid to the clearing house by the brokers as insurance against losses.
• B) funds paid to the clearing house by each trader to cover losses.
• C) realised profits paid by the clearing house to traders.
• D) the difference between the futures contracts price and the underlying asset.

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Definitions:

Outflow

The movement of money out of a business or financial account, often associated with expenses or investments.

Payback Period

The length of time that it takes for a project to fully recover its initial cost out of the net cash inflows that it generates.

Working Capital

The amount of a company's current assets minus its current liabilities, indicating the short-term financial health and operational efficiency of a business.

Salvage Value

The projected value of an asset when it reaches the end of its operational life.