The Purpose of a Margin Account for a Futures Contract

question 97

Multiple Choice

The purpose of a margin account for a futures contract is to:

• A) guarantee a minimum margin of profit for the contract holder.
• B) allow futures traders to have more than one contract simultaneously.
• C) provide a cushion for the exchange against defaults on the contract.
• D) hold interest payments until expiration.

---

Definitions:

K-selected

Characterizes species that produce fewer offspring, with a larger investment in each, typically adapting to stable environments where competition is strong.

Biotic Potential

An organism’s greatest capability to reproduce in the best possible environmental circumstances.

Environmental Resistance

Factors in the environment that limit the growth, abundance, or distribution of organisms or populations within an ecosystem.

Pathogens

Microorganisms that cause disease in their hosts, including bacteria, viruses, fungi, and parasites.