Question

In case when prices are going down, buyer of a futures position will be given a call for the margin:

A When the margin falls below the maintenance margin Correct Answer Incorrect Answer
B When the margin falls below initial margin but is still above maintenance margin Correct Answer Incorrect Answer
C When the margin is above the maintenance margin Correct Answer Incorrect Answer
D When the margin is zero Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

If the margin account falls below the maintenance margin, a broker may call to deposit more funds and must bring the margin account back to initial margin amount. The amount necessary to this is called a variation margin

Practice Next
×
×