The funds deposited with a broker to fund the trading of futures contracts are called

The funds deposited with a broker to fund the trading of futures contracts are called

• A. Margin money
• B. Margin call
• C. Commission
• D. Brokerage fee

Answer: (A)

Margin money is the funds you deposit with a broker to back futures positions. It serves as collateral or a performance bond to cover potential losses. The margin requirement is a fraction of the contract value, called the initial margin, and the balance is adjusted daily as gains or losses occur. If the account falls below the maintenance margin, a margin call is issued to top up funds. The other options are trade costs—the commission or brokerage fee—not the funds used to fund trading.

Margin money is the funds you deposit with a broker to back futures positions. It serves as collateral or a performance bond to cover potential losses. The margin requirement is a fraction of the contract value, called the initial margin, and the balance is adjusted daily as gains or losses occur. If the account falls below the maintenance margin, a margin call is issued to top up funds. The other options are trade costs—the commission or brokerage fee—not the funds used to fund trading.