The primary benefit of a futures exchange is
A)always knowing its exact location.
B)indemnifying counterparties against credit or default risk.
C)guarantee of trading volume.
D)intervention on the trader's behalf with government regulators.
E)availability of free legal services.

Question

Quizplus · Accepted Answer

The primary benefit of a futures exchange is to indemnify counterparties against credit or default risk through the use of clearinghouses, which act as intermediaries between buyers and sellers, guaranteeing the performance of the trade. This reduces counterparty risk and promotes market liquidity. The other choices are not accurate descriptions of the benefits of a futures exchange.

The Primary Benefit of a Futures Exchange Is