When a futures contract is purchased,________.

Question

Quizplus · Accepted Answer

When a futures contract is purchased, the buyer must deposit a certain amount of cash into a margin account. This acts as collateral and helps cover any potential losses that may result from changes in the price of the underlying asset. No money changes hands at the time of purchase, and the buyer may either gain or lose money depending on the price movement of the asset over time. The futures commission merchant may charge a commission, but this is not necessarily marked up on the price of the contract.

When a Futures Contract Is Purchased,________