Futures contracts require that the purchaser deposit an initial sum as collateral. This deposit is called a:
A) collateralized deposit.
B) marked market sum.
C) margin.
D) settlement.

Question

Quizplus · Accepted Answer

The deposit required as collateral for a futures contract is called margin. The purpose of margin is to ensure that the purchaser has the necessary funds to cover potential losses that may occur during the time period of the contract. It is typically a percentage of the total value of the contract, and may be adjusted periodically depending on the market conditions.

Futures Contracts Require That the Purchaser Deposit an Initial Sum