SIDC Module 14 Practice Questions - SC Licensing Examination Module 14 Derivatives (Futures And Options) Exam

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Which feature most clearly distinguishes an exchange-traded futures contract from an over-the-counter (OTC) forward contract?

Futures are standardised and cleared through a clearing house, while forwards are customised and bilateral Forwards carry no counterparty risk Futures cannot be used for hedging Forwards are always cash-settled

Correct Answer:

Futures are standardised and cleared through a clearing house, while forwards are customised and bilateral

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