Novation in Futures Exchange Means

question 29

Multiple Choice

Novation in futures exchange means:

• A)a requirement that gains or losses on futures positions be taken into account in determining the value of all contracts each day.
• B)the back office that records,clears and settles contracts and acts as counterparty in futures trading.
• C)a place in which buyers and sellers can exchange futures contracts.The exchange keeps the books for buyers and sellers when contracts are initiated or liquidated.
• D)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:

Contract Price

The financial consideration stipulated in a contract that is agreed upon by both parties for the sale, lease, or other forms of exchange.

Discharge By Breach

The termination of a contractual obligation due to one party's failure to fulfill the contract terms, allowing the non-breaching party to seek remedies.

Material Failure

A significant malfunction or defect in a product or system that prevents it from functioning as intended or causes a hazard.

Accord And Satisfaction

A legal contract whereby a dispute is settled by the parties involved agreeing on payment that is different from the original obligation.