How Do Exchanges Seek to Reduce Default Risk in the Futures

question 41

Essay

How do exchanges seek to reduce default risk in the futures market?

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Definitions:

Entrepreneur

An individual who, instead of working as an employee, runs a small business and assumes all the risks and rewards of a given business venture.

Earn A Profit

The process of making financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something.

Charging Interest

The act of lending money or capital with the expectation of receiving payment back plus additional money, known as interest, which serves as the cost of borrowing.

Corporate Profits

Corporate profits denote the earnings of a company after all expenses, taxes, and costs have been subtracted from total revenue.