Through the Processes of Novation and Margin Payments, the Clearinghouse

question 76

Multiple Choice

Through the processes of novation and margin payments, the clearinghouse:

• A)becomes counterparty to each futures transaction
• B)seeks to protect traders from default risk
• C)will close out the position of defaulting traders
• D)guarantees the performance of futures contracts.
• E)All of these are correct.

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U.S. Dollar

A monetary unit of the United States, symbolized as $, and considered one of the world's most dominant reserve currencies.

Exchange Rate

The worth of a currency when exchanging it for another currency.

Australian Dollars

The official currency of Australia, represented by the symbol AUD.

Exchange Rate

The value of one currency for the purpose of conversion to another.