Futures Contracts Minimize Default Risk by Requiring Traders to Post

question 47

Multiple Choice

Futures contracts minimize default risk by requiring traders to post collateral called ________ when buying or selling commodities using futures contracts.

• A)down payment
• B)marked to market
• C)margin
• D)commission
• E)deposit

---

Definitions:

Good Substitutes

Products or services that can be used in place of each other, with consumers willing to switch from one to the other if the price or quality changes.

Necessity

Goods or services considered essential for basic human survival and well-being, such as food, water, and shelter.

Income Percentage

A measure or fraction of personal or household income, often used in context to describe expenditure, saving, or taxation ratios.

Inelastic Demand

A situation in which the demand for a product does not significantly change in response to a change in price.