The Margin Requirement Will Be Lower Than the Standard Requirement

question 23

Multiple Choice

The margin requirement will be lower than the standard requirement on a stock index futures contract when:

• A)the stock market is declining.
• B)the futures are used to hedge a portfolio.
• C)the investor is establishing a speculative position.
• D)None of the above

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Definitions:

Priming

A psychological phenomenon where exposure to one stimulus influences a response to a subsequent stimulus, without conscious guidance or intention.

Entrepreneurial Behavior

Actions and attitudes that reflect an inclination towards innovation, risk-taking, and the creation of new value or business ventures.

Innovation

The process of translating an idea or invention into a good or service that creates value or for which customers will pay.

Risk Assumption

The act of taking on the potential for loss or harm as part of a project, investment, or business, often in pursuit of a reward.