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Discuss how the exchange requirements that mandate traders to put up collateral in the form of a margin requirment and to use this account to mark their profits or losses for the day serve to eliminate credit or default risk.

Because (both parties have or neither party has ) to post margin when they enter into a futures contract and because they mark to market ( on the delivery date or every day until the delivery date) we are ( assured or not assured) the party and the counterparty to the contract have already posted the gain or loss to the other and risk of default ( still exists or is theeby negated )

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M942052

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