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What is one key feature of futures?
Suggested Answer: C
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Futures contracts are standardized agreements to buy or sell an asset at a predetermined price on a future date. They are unique because they can be traded on regulated exchanges, such as the Chicago Mercantile Exchange (CME), or over-the-counter (OTC), where counterparties negotiate terms directly.
This dual trading mechanism ensures flexibility and accessibility for market participants, differentiating futures from other derivatives like forwards, which are typically OTC-only.
Study Document Reference:
Volume 1, Chapter 10: Derivatives and Features of Futures, including how they are traded.
4 comments · newest first
IL
Ilda
38 minutes ago
I definitely remember that futures can be traded in different markets, so I would lean towards option C.
EA
Earleen
5 days ago
I feel like the answer might be related to offsetting contracts, but I can't recall the specifics.
BO
Bok
10 days ago
I remember practicing a question about futures, and I think it mentioned something about both parties needing to participate in the trade.
DA
Dawne
16 days ago
I think one key feature of futures is that they can trade on an exchange or over-the-counter market, but I'm not entirely sure.