Statements is true regarding the nature of futures contracts

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Reference no: EM132036974

1. Suppose that the initial margin for a given futures contract decreases, but the maintenance margin remains the same. Which of the following is true, all else being equal?

People who buy or sell this futures contract after the margin change have the potential for more financial leverage than before.

The change in the leverage requirement can make the contract more affordable.

The range in which losses can occur without a margin call being triggered will decrease.

All of the above.

2. Which of the following statements is true regarding the nature of futures contracts?

They are highly specialized and can be tailored to meet the individual needs of most investors.

Futures contracts rely on the commoditization the underlying assets they're written on.

The price at an futures investor buys or sells the underlying asset for is typically determined by a dealer.

None of the above.

Reference no: EM132036974

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