All of the Following Are Roles of an Exchange EXCEPT

question 120

Multiple Choice

All of the following are roles of an exchange EXCEPT

• A) instituting margin requirements on futures contracts.
• B) marking to market at the end of each day.
• C) eliminating 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:

Future Cash Flows

Estimated incoming and outgoing cash transactions expected to occur in the future.

Net Book Value

The value of an asset after accounting for depreciation or amortization, representing its residual value on the balance sheet.

Double Declining-Balance Depreciation

A method of accelerated depreciation that doubles the straight-line rate of depreciation.

Estimated Residual Value

The projected value of an asset at the end of its useful life, used in calculating depreciation.