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.

Question

Quizplus · Accepted Answer

The primary benefit of a futures exchange is indemnifying counterparties against credit or default risk. This means that the exchange takes on the risk of one party defaulting, thus protecting the other party. This is achieved through margin requirements and daily mark-to-market settlements, providing a level of security and reducing counterparty risk.

The Primary Benefit of a Futures Exchange Is