What organized exchange mechanism reassures the futures buyer and seller that the obligations of the other party will be fulfilled?
A) the clearinghouse
B) the initial margin
C) marking to market
D) the maintenance margin

Question

Quizplus · Accepted Answer

The clearinghouse is the organized exchange mechanism that ensures the fulfillment of obligations for both the futures buyer and seller. The clearinghouse acts as an intermediary between the two parties, guaranteeing that each party will fulfill their obligations. In case of default on either side, the clearinghouse steps in to honor the obligations and settle the contract.

What Organized Exchange Mechanism Reassures the Futures Buyer and Seller