If two parties enter into the same futures contract,one as a buyer and the other as a seller,how many contracts are formed?
A)One,between the two parties.
B)Two,one between the buyer and seller and the other with the exchange.
C)Two,each with the clearinghouse of the exchange.
D)Three,two between each party and the clearinghouse and one between each party.

Question

Quizplus · Accepted Answer

In futures markets, each party enters into a contract with the clearinghouse, not directly with each other. Thus, two contracts are formed, one between the buyer and the clearinghouse and another between the seller and the clearinghouse.

If Two Parties Enter into the Same Futures Contract,one as a Buyer