The "Initial Margin" on a Futures Contract

question 14

Multiple Choice

The "initial margin" on a futures contract:

• A) is a cash deposit the buyer places with the seller as good faith money.
• B) can be cash or U.S. government securities placed with an exchange member.
• C) are U.S. government securities the buyer places with the seller for safekeeping.
• D) are the first installment on the payment for a futures contract.
• E) is the amount by which the futures contract is initially "in the money."

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Definitions:

Stakeholder Perspective

An approach in business and management that considers and addresses the interests and welfare of all parties affected by organizational decisions, including employees, customers, investors, and the community.

Shareholders

Individuals or entities that own shares in a corporation, thus having a financial interest and potentially a say in its operations.

Financialization

The increasing importance of financial markets, financial motives, financial institutions, and financial elites in the operation of the economy and its governing institutions.

Short Term Profits

Financial gains realized in a brief period, often prioritized over long-term sustainability.