In relation to futures markets,which of the following regarding initial margins is false?
A) A futures trader is required to pay an initial margin to the clearinghouse.
B) The initial margin will be higher for low market volatility.
C) If the futures contract price drops below the minimum percentage, the initial margin will have to be increased.
D) In order to top up an insufficient initial margin a maintenance margin call will be made.

Question

Quizplus · Accepted Answer

The initial margin is determined by the risk associated with the underlying asset, not by market volatility. A higher market risk associated with the asset will result in a higher initial margin requirement.

In Relation to Futures Markets,which of the Following Regarding Initial