ECONOMICS
FINANCIAL MARKETS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Mutual Fund
|
|
|
The other party or participant in a trade
|
|
|
A Large Financial Organization
|
|
|
Clearing Agent Bank at which the Corporation holds Securities
|
Detailed explanation-1: -A counterparty is simply the other side of a trade-a buyer is the counterparty to a seller. A counterparty can include deals between individuals, businesses, governments, or any other organization. Counterparty risk is the risk that the other side of the trade will be unable to fulfill their end of the transaction.
Detailed explanation-2: -A ‘client’ in relation to an OTC derivative provider is a person other than a counterparty, with whom an OTC derivative provider (i), executes an OTC derivative transaction; or (ii) enters into a relationship with the intention of executing OTC derivative transactions.
Detailed explanation-3: -In a contract, a counterparty is the other party to the contract. The term “counterparty” can refer to either an individual or a legal entity, such as a corporation. A counterparty is typically bound by the terms of the contract and is obligated to perform its duties under the agreement.
Detailed explanation-4: -Example of a Counterparty For example, when you sell a car to a buyer, the buyer is the counterparty. Similarly, if you enter into a home insurance contract, the insurer is the counterparty. A counterparty can be an individual or some other entity, such as a company or a government.
Detailed explanation-5: -Also within financial services, counterparty can refer to brokers, investment banks, and other securities dealers that serve as the contracting party when completing “over the counter” securities transactions.