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

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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