The Chicago Board of Trade promotes liquidity in the futures market by
A) setting prices.
B) establishing a price floor.
C) allowing the short or the long to renegotiate contract terms.
D) standardizing contract terms.

Question

Quizplus · Accepted Answer

The Chicago Board of Trade promotes liquidity in the futures market by standardizing contract terms. Standardized contracts help attract traders and investors by providing them with a clear understanding of what they are buying and selling. This standardization also helps promote liquidity by making it easier for traders to find counterparties to trade with. The other options (A, B, and C) do not directly promote liquidity but rather focus on setting prices, establishing a price floor and allowing the renegotiation of contract terms, respectively.

The Chicago Board of Trade Promotes Liquidity in the Futures