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Explain How the Clearing Corporation Reduces the Risk It Faces

question 15

Essay

Explain how the clearing corporation reduces the risk it faces in the futures market through the use of margin accounts and marking-to-market.


Definitions:

Blow Off Loads

A safety mechanism designed to release excess pressure or load from a system to prevent damage or failure, often used in pressure vessels and hydraulic systems.

Semi-Trailer Bogie

A semi-trailer bogie is a wheel assembly located at the rear of a semi-trailer, providing support and stability to the trailer structure by distributing its load over multiple axles.

Trailer Bridge Formula

A formula used to determine the appropriate weight limits for bridges and roadways, considering the trailer's length and axle spacing.

Tractor Bridge Formula

A mathematical equation used in transportation to determine the maximum allowable weight on any set of axles on a tractor-trailer, based on the distance between those axles.

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