Purchasers and sellers of futures are generally required to deposit an initial margin in the range of ___________ with the exchange's clearinghouse to reduce credit risk.
A) 25 to 50 dollars
B) 15 to 20 dollars
C) generally more than 10%
D) generally less than 10%

Question

Quizplus · Accepted Answer

Initial margins for futures contracts are typically set as a percentage of the contract value, and this percentage is generally less than 10%. This requirement is in place to mitigate credit risk by ensuring that both buyers and sellers have a financial stake in the contract, but it is not so high as to be prohibitive.

Purchasers and Sellers of Futures Are Generally Required to Deposit