With regard to futures contracts, what does the word "margin" mean?
A) It is the amount of the money borrowed from the broker when you buy the contract.
B) It is the maximum percentage that the price of the contract can change before it is marked to market.
C) It is the maximum percentage that the price of the underlying asset can change before it is marked to market.
D) It is a good-faith deposit made at the time of the contract's purchase or sale.
E) It is the amount by which the contract is marked to market.

Question

Quizplus · Accepted Answer

Margin in the context of futures contracts refers to a good-faith deposit required when entering into a futures contract. This deposit is meant to ensure the financial integrity of the position and is adjusted daily based on market movements.

With Regard to Futures Contracts, What Does the Word "Margin