- CFA Exams
- CFA Level I Exam
- Topic 7. Derivatives
- Learning Module 1. Derivative Instrument and Derivative Market Features
- Subject 2. Derivative Markets
CFA Practice Question
The clearinghouse acts as ______.
II. LONG to every SHORT
III. seller to every buyer
I. buyer to every seller
II. LONG to every SHORT
III. seller to every buyer
Correct Answer: I, II and III
The clearinghouse is interposed between buyers and sellers in every futures transaction.
User Contributed Comments 4
| User | Comment |
|---|---|
| MaiHuong | Long to every short, what does this mean? |
| achu | It means "buyer" (Long holding) and seller to every SHORT. |
| bobert | A person who sells a contract is considered short the contract, and a person who buys a contract is long the position. A long position will pay money to the short for the underlying asset at the expiration of the contract, and the short position will receive the money for the underlying asset. |
| ankurwa10 | @MaiHuong - It means buyer to every seller. Long - Buy; Short- Sell (remember it as short-selling, so Short stands for selling, and long stands for buying) |