The Purchaser of a Futures Contract

question 44

Multiple Choice

The purchaser of a futures contract

• A) is required to obtain a margin loan equal in amount to the cost of the contract minus the cash down payment.
• B) is generally required to make a cash deposit of 10 to 20% of the contract price at the time the contract is entered.
• C) does not have to worry about margin calls since margin loans are not required.
• D) is affected by the daily procedure known as mark-to-the-market.

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Definitions:

Marginal Cost

The cost of producing one more unit of a good or service.

Socially Efficient

A condition where resources are allocated in a way that maximizes the overall benefit to society, taking into account all costs and benefits.

Marginal Cost

The additional cost incurred by producing one more unit of a good or service.

Nash Equilibrium

Nash Equilibrium is a concept in game theory where each player's strategy is optimal given the strategies of all other players, leading to a situation where no player can benefit by changing strategies unilaterally.