When a Counterparty to a Futures Contract Fails to Perform

question 7

Multiple Choice

When a counterparty to a futures contract fails to perform under the contract,

• A) The futures exchange informs the party on the other side of the amount of loss they will bear.
• B) The futures exchange bears the loss,
• C) The futures exchange sues the failed counterparty.
• D) The futures exchange replaces the failed counterparty with a solvent one.

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Definitions:

Px/Py

A ratio indicating the price of one good (Px) relative to the price of another good (Py), used in economics to analyze consumer choice and purchasing power.

Indifference Curves

Graphical representations used in microeconomics to show combinations of two goods that give the consumer the same level of satisfaction.

Concave

A shape or curve that is rounded inward, like the inside of a circle or sphere, often used in the context of mathematical functions or geometric figures.

Convex

A shape or function that curves outward, where the line connecting any two points on it lies above or on the curve.