Each futures exchange has an associated ____ that becomes the "seller's buyer" and the "buyer's seller" as soon as a trade is concluded
A) clearinghouse
B) specialist
C) short hedger
D) long hedger

Question

Quizplus · Accepted Answer

The clearinghouse functions as the counterparty to every futures trade, ensuring that both parties fulfill their obligations. It becomes the buyer to the seller and the seller to the buyer, taking on the risk of default by either party. The specialist is responsible for maintaining an orderly market for a specific stock on the stock exchange. Short and long hedgers are market participants who use futures contracts to manage their price risk.

Each Futures Exchange Has an Associated ____ That Becomes the "Seller's