Counterparty risk in a futures contract is lower than in a forward contract because
A) The participants in the futures market are better funded.
B) The futures contract is marked-to-market on a daily basis.
C) The futures exchange bears the counterparty risk.
D) The forward market does not charge commissions that may be used to offset the risk of counterparty failure.

Question

Counterparty risk in a futures contract is lower than in a forward contract because 
A) The participants in the futures market are better funded.
B) The futures contract is marked-to-market on a daily basis.
C) The futures exchange bears the counterparty risk.
D) The forward market does not charge commissions that may be used to offset the risk of counterparty failure.

Quizplus · Accepted Answer

The Answer of Counterparty risk in a futures contract is lower than in a forward contract because 
A) The participants in the futures market are better funded.
B) The futures contract is marked-to-market on a daily basis.
C) The futures exchange bears the counterparty risk.
D) The forward market does not charge commissions that may be used to offset the risk of counterparty failure.

Counterparty Risk in a Futures Contract Is Lower Than in a Forward