All of the Following Are Roles of a Clearinghouse EXCEPT

question 36

Multiple Choice

All of the following are roles of a clearinghouse EXCEPT

• A)instituting margin requirements on futures contracts.
• B)marking to market at the end of each day.
• C)eliminate the need for buyers and sellers of futures contracts to be concerned about the creditworthiness of each other.
• D)reducing the default risk involving forward contracts.

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Definitions:

Monthly Payment

A specified amount of money that a borrower agrees to pay to a lender at regular monthly intervals, often associated with loans or mortgages.

Loan

A sum of money given to a person or entity with the expectation of repayment of the original sum along with agreed interest over a specified period.

Nominal Rate

Refers to the interest rate before adjustments for inflation or other factors.

Effective Rate

The actual interest rate that borrowers pay or investors receive on a financial product, once all the compounding periods are factored in, often higher than the nominal rate.