All of the following are roles of a clearinghouse EXCEPT
A)instituting margin requirements on futures contracts.
B)marking to market at the end of each day.
C)eliminate the need for buyers and sellers of futures contracts to be concerned about the creditworthiness of each other.
D)reducing the default risk involving forward contracts.

Question

Quizplus · Accepted Answer

Clearinghouses are primarily involved in futures contracts, not forward contracts. Forward contracts are private agreements between two parties and do not typically involve a clearinghouse, which helps mitigate risk in standardized contracts like futures by acting as an intermediary and ensuring the financial integrity of the contracts.

All of the Following Are Roles of a Clearinghouse EXCEPT