The return on a futures contract
A) is highly related to the low margin requirement.
B) is always equal to or greater than zero.
C) tends to be fairly stable from one trading day to the next.
D) is solely related to the current price of the underlying item.

Question

Quizplus · Accepted Answer

The return on a futures contract is highly related to the low margin requirement because futures are leveraged instruments, meaning that investors can control a large amount of the underlying asset with a relatively small amount of capital (the margin). This leverage amplifies both gains and losses, making the return on futures contracts highly sensitive to changes in the price of the underlying asset relative to the margin requirement.

The Return on a Futures Contract