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Compared with a private long term contract, a futures contract avoids:

ACredit risk
BCurrency risk
CCountry risk
DCapital risk
Answer & Solution
Correct answer: A. Credit risk
1. The exchange stands between the two parties. 2. Neither side depends on the other's solvency. 3. So it avoids credit risk. _Source: OpenStax Principles of Finance, Chapter 20, Risk Management and the Financial Manager._
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