1215

If the margin balance in a futures account with a long position goes below the maintenance margin amount:

A) a margin deposit equal to the maintenance margin is required within two business days.

B) a deposit is required which will bring the account to the maintenance margin level.

C) a deposit is required to return the account margin to the initial margin level.

---

Once account margin (based on the daily settlement price) falls below the maintenance margin level, it must be returned to the initial margin level, regardless of subsequent price changes.

1215

The settlement price for a futures contract is:

A) an average of the trade prices during the ‘closing period’.

B) the price of the last trade of a futures contract at the end of the trading day.

C) the price of the asset in the future for all trades made in the same day.

---

The margin adjustments are made based on the settlement price, which is calculated as the average trade price over a specific closing period at the end of the trading day. The length of the closing period is set by the exchange.

1215

Which of the following statements regarding a futures trade of a deliverable contract is NOT correct?

A) The long is obligated to purchase the asset.

B) Equilibrium futures price is known only at the end of the trading day.

C) The price is determined by open outcry.

---

Each trade is made at the then current equilibrium price, determined by open outcry on the floor of the exchange, and is reported as it is executed. The long is obligated to buy, and the short is obligated to sell, the specified quantity of the underlying asset.

1215

The initiation of a futures position:

A) requires both a buyer and a seller.

B) is done through a bank or other large financial institution acting as a dealer.

C) is at a price negotiated between the buyer and seller.

---

Futures trades are done through open outcry on the futures exchange and require a buyer (long) and a seller (short) for a trade to take place. The other statements are generally true for forward contracts, which are all individually negotiated.

luqian55

thanks a lot