Question
If a contract is a forward, swap, or OTC option, is it typically OTC or exchange-traded?
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Answer
OTC.
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Question
Which underlying asset class is being referenced when a derivative payoff depends on a firm's default?
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Answer
Credit.
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Question
Why is counterparty credit risk highest in OTC contracts?
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Answer
Performance depends on the bilateral counterparty's ability to pay.
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Question
How does market transparency generally differ between exchange-traded and OTC derivatives?
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Answer
Exchange-traded markets have public prices; OTC markets are private.
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