22-54 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. Futures exchanges act as intermediaries between buyers and sellers of futures contracts and ensure that both parties meet their obligations under the contract, thereby reducing the risk of default. This is done through a system of margin requirements and daily settlement procedures, which require traders to deposit collateral and settle their accounts on a daily basis.

22-54 the Primary Benefit of a Futures Exchange Is