An OTC forward contract is:Select one:a. a forward contract for which the payback is outside the contract periodb. a standardised agreement that is traded on an exchange.c. a customised agreement that is not traded on an exchanged. an option to call
Question
An OTC forward contract is:Select one:a. a forward contract for which the payback is outside the contract periodb. a standardised agreement that is traded on an exchange.c. a customised agreement that is not traded on an exchanged. an option to call
Solution
The correct answer is:
c. a customised agreement that is not traded on an exchange.
An OTC (Over-The-Counter) forward contract is a private agreement between two parties. It is not traded on an exchange, and the terms of the contract can be customized to fit the needs of both parties.
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