Futures Margin Is Defined as the Deposit of Funds into a Futures

question 20

Multiple Choice

Futures margin is defined as the deposit of funds into a futures trading account for which one of the following purposes?

• A)purchase additional futures contracts
• B)take a hedge position in the future
• C)cover potential losses from outstanding positions
• D)cover the trading costs and commissions
• E)cover the future costs of reversing the position

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Definitions:

Diversification

A risk management strategy that involves spreading investments across various financial assets, industries, or other categories to minimize exposure to any single risk or volatility.

Firm-specific Risk

Risk factors affecting only a specific company or industry, as opposed to broader market or economic risks.

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of values from their average.

Volatility

Measures the degree of variation of a trading price series over time, typically used in financial contexts to indicate the risk of an investment.