Margin Requirements Are Deposits Placed by Investors in Futures Contracts

question 154

True/False

Margin requirements are deposits placed by investors in futures contracts with their respective brokerage firms when they take their position. They are intended to minimize credit risk associated with futures contracts.

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Definitions:

Lockbox Services

Bank-provided services that expedite the collection and processing of account receivable payments by having them sent directly to a secure post office box.

Collection Funds

Monies that are being gathered or have been gathered for a specific purpose, often related to financial transactions or payments.

T-Bills

Short-term government securities issued at a discount from par value, which mature and pay back the full face value.

Cheque Size

Cheque size typically refers to the amount of investment money a party is willing to commit in a deal, transaction, or investment opportunity.