Explain maintenance of future and option margins
Explain maintenance of future and option margins.
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With short and futures options there are margins also to be paid, generally daily, to a clearing house like a safeguard against credit risk. Therefore if prices move against you, you need pay a maintenance margin. It will be based upon the prevailing market values of the futures and short options.
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The discussion of zero-coupon bonds in the text gave an instance of two zero-coupon bonds issued through Commerzbank. The DM300, 000,000 issues due in the year of 1995 sold at 50 percent of face value and the DM300, 000,000 due in the year of 2000 sold a
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