CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

The clearinghouse acts as ______.

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)
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