All Futures Contracts Are Traded on a Margin Basis

question 19

Essay

All futures contracts are traded on a margin basis. What does "margin" mean, and how does the use of margin affect the inherent risk-return nature of the futures market?

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Definitions:

Experimenters

Individuals who conduct experiments to test hypotheses or observe phenomena under controlled conditions.

Random Assignment

A method used in experiments to place participants into different groups using chance, ensuring that each group is equally likely to receive different treatments.

Intelligence

The ability to acquire knowledge, solve problems, and use reasoning to adapt to new situations.

Test Difficulty

A measure of how challenging a test or examination is, often determined by the proportion of test-takers who answer each item correctly.