Futures trading requires large amounts of capital because the buyer of a contract must deposit the full settlement price of the contract at the time of purchase.

Name: Futures trading requires large amounts of capital because the buyer of a contract must deposit the full settlement price of the contract at the time of purchase.
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Question

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Futures trading involves margin trading, where the buyer only needs to deposit a fraction of the contract's value, known as the initial margin, not the full settlement price.

Futures Trading Requires Large Amounts of Capital Because the Buyer