Which of the Following Is Incorrect Regarding Organized Exchanges Trading

question 25

Multiple Choice

Which of the following is incorrect regarding organized exchanges trading financial futures contracts?

• A) Organized exchanges establish and enforce rules for the trading of financial futures contracts.
• B) Organized exchanges ensure that the seller of the futures contract always delivers the securities covered by the contract, whether the contract was settled prior to the settlement date or not.
• C) Organized exchanges clear, settle, and guarantee all transactions that occur on their exchanges.
• D) The operations of financial futures exchanges are regulated by the Commodity Futures Trading Commission (CFTC).
• E) All of the above are correct.

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Definitions:

Triangle Arbitrage

A riskless profit strategy that takes advantage of discrepancies between three foreign currencies in the forex market.

Spot Market

A market where financial instruments or commodities are traded for immediate delivery, as opposed to future or forward delivery.

Forward Market

A market in which participants agree to trade a financial instrument or physical commodity for future delivery at a specified price.

Absolute Purchasing Power Parity

A theory stating that identical goods and services in different countries should cost the same when priced in a common currency.