Question

You can withdraw funds from your margin account without closing your futures contract given which two of the following? I. marking to market deducts funds from your margin account II. marking to market adds funds to your margin account III. margin balance after the withdrawal will exceed the maintenance margin requirement IV. margin balance after the withdrawal will exceed the initial margin requirement Multiple Choice I and III only I and IV only II and III only II and IV only Funds cannot be withdrawn as long as the futures contract is outstanding.

Answer 1

To withdraw funds from a margin account without closing a futures contract, the marking to market deducts funds and the margin balance after the withdrawal must exceed the maintenance margin requirement. The correct answer is I and III only.

Step-by-step explanation:

When it comes to margin accounts and futures contracts, there are certain rules and requirements to consider. In order to withdraw funds from your margin account without closing your futures contract, two conditions must be met:

1. The marking to market process deducts funds from your margin account. This means that the value of your futures contract is adjusted based on the current market price and the difference is either added or deducted from your margin account. So, if you have positive funds in your margin account, you can withdraw them without closing your futures contract.
2. The margin balance after the withdrawal must exceed the maintenance margin requirement. The maintenance margin requirement is the minimum amount of funds you need to maintain in your margin account to keep the futures contract active. If the balance after the withdrawal is higher than the maintenance margin requirement, then you can withdraw funds without closing your futures contract.

Therefore, the correct answer to the question is I and III only.