Each futures exchange has an associated clearing house that
A) becomes the seller's buyer
B) becomes the buyer's seller
C) is responsible to deliver on default contracts
D) will face a greater risk if there is no marking-to-market
E) all of the above

Question

Quizplus · Accepted Answer

Each futures exchange has an associated clearing house that performs all of the mentioned functions. The clearing house acts as a buyer to the seller and a seller to the buyer, assuming the counterparty risk and ensuring that contractual obligations are fulfilled in case of default. Marking-to-market reduces risk for the clearing house, as it avoids building up losses.

Each Futures Exchange Has an Associated Clearing House That