Finc derivatives margin accounts
Studied by 0 people
Call Kai
Learn
Practice Test
Spaced Repetition
Match
Flashcards
Knowt Play1/9
There's no tags or description
Looks like no tags are added yet.
Name | Mastery | Learn | Test | Matching | Spaced | Call with Kai |
|---|
No analytics yet
Send a link to your students to track their progress
10 Terms
Q: What is a margin account?
A: Account holding funds to cover potential losses and avoid credit risk in futures trading.
Q: What is the initial margin?
A: Money deposited when entering a futures contract.
Q: What is marking to market?
A: Daily adjustment of the margin account to reflect gains or losses.
Q: What is the maintenance margin?
A: Minimum balance the margin account must maintain.
Q: What triggers a margin call?
A: Balance falls below maintenance margin; trader must top up to initial margin.
Q: What is the role of a central counterparty (CCP)?
A: Removes credit risk in OTC forwards by acting like a clearing house.
Q: What is short selling?
A: Selling an asset you do not own by borrowing it first, then buying back later to return it.
Q: What steps are involved in short selling?
A: Borrow → Sell → Buy back → Return.
Q: What obligations does a short seller have?
A: Pay any income (dividends or coupons) during the borrowing period.
Q: Is a margin account needed for short selling?
A: Yes — funds must be kept with the broker arranging the short sale.
Note 
Flashcards (39)