$[$Related to the Making the ConnectionLOADING...$]$ In one of his annual letters to shareholders of Berkshire$$ Hathaway, Warren Buffett wrote that trading derivatives has much more counterparty risk than does trading stocks or bonds because$$ "a normal stock trade is completed in a few days with one party getting its$$ cash, the other its securities$.$ Counterparty risk therefore quickly$$ disappears...."

$$Source: Warren$$ Buffett, "Chairman's$$ Letter," Berkshire Hathaway Inc. $2008$ Annual Report$,$ February$27,2009.$

Part $2$

Counterparty risk$$ is:

A$.$

the risk of bargaining.

B$.$

the risk that one party will sell the contract without notifying the other party.

C$.$

the risk of the other party to the transaction defaulting.$$

D$.$

the risk that the buyer or seller may be unwilling to fulfill the contract.

Part $3$

Counterparty risk is greater for trading in derivatives$$ because:

A$.$

some of the more complicated derivatives are traded on exchanges.

B$.$

the transaction is completed before the underlying asset matures.

C$.$

the transaction is only completed after the underlying asset has matured.

D$.$

none of the above.