Collateral Yeild

CFA Level I Alternative Investments
#1

There are 2 versions of explanation that I find for collateral yeild, not sure which is the right one

Version 1:

Futures require collateral (margin) to enter into a contract. The entire cash position does not have to be paid upfront, only the margin is due at the outset of the contract. So after paying for the margin, the remaing cash(which does not have to be deposited in the margin account) bring some return when invested which is collateral yeild.

Version 2:

The margin amount for a futures contract need not be cash, it can also be T-bills. T-bills that are posted as collateral (margin) in a futures contract, earn some interest which is collateral yeild.

Which one of the above defnition is correct ?

#2

Both are.

Version 1: Cash (not used in the other positions) can sit in a money market, earning some interest.

Version 2: T-bills can be used as collateral against the position (if the position goes against the trader, the t-bill will be called to offset the loss). Although the t-bill is tied up as collateral, it still pays interest.