Features of Exchange-Traded Derivatives

Easy Derivative Markets And Instruments Exchange-traded Derivatives

In the context of financial derivatives, exchange-traded derivatives are standardized contracts that are traded on regulated exchanges. These derivatives include options and futures that provide a mechanism for managing risk associated with price fluctuations of underlying assets. Which of the following accurately describes a key feature of exchange-traded derivatives?

They can be customized to fit the specific needs of the parties involved.

They are subject to lower counterparty risk than over-the-counter derivatives.

They are only traded during specific hours of the day and are not liquid.

Hint

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