Novation in Futures Exchange Is the Process of Setting Up

question 26

True/False

Novation in futures exchange is the process of setting up a contract with a new party,such as occurs when clearinghouses insert themselves between the buyer and seller of a futures contract.

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Definitions:

Break-Even Point

The level of production or sales at which total costs equal total revenue, resulting in zero profit or loss.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the percentage of fixed versus variable costs a company has.

Variable Costs

Expenses that change in proportion to the level of production or sales activity.

Composite Units

A measure used in accounting to bundle goods or services together for the purposes of inventory management, costing, or sales analysis.