An investor who wants a long position in a ____ must first place the order with a broker, who then passes it on to the trading pit or electronic network. Details of the order are then passed on to the exchange clearinghouse.
A) call option
B) put option
C) forward contract
D) futures contract
E) none of the above

Question

Quizplus · Accepted Answer

Futures contracts are traded on exchanges, and orders are placed through brokers who execute the trade on the exchange. Therefore, an investor wanting a long position in a futures contract must place the order through a broker who will pass it on to the exchange clearinghouse. Options and forward contracts are typically traded over-the-counter rather than on exchanges, so they would not involve the exchange clearinghouse in the same way as futures contracts.

An Investor Who Wants a Long Position in a ____