Futures Contracts Can Result in Significant Losses for Traders

question 33

Essay

Futures contracts can result in significant losses for traders.Explain how the market manages default risk.In your answer refer to the initial margins currently required by the ASX (Table 13.2)and comment broadly on how these margins are determined.

---

Definitions:

Wage Labor

A system of employment where workers are paid a fixed hourly rate or salary for their labor, as opposed to earning profits or owning the means of production.

Economic Prosperity

A state of flourishing or thriving economically, often characterized by wealth, success, and high standard of living within a country or region.

American Freedom

The ideals, rights, and liberties associated with being a citizen of the United States, often centered around concepts like democracy, equity, and freedom of expression.

National Boundaries

Defined lines that mark the territorial limits of a nation and separate it from neighboring countries.