When currency options are not standardized and are traded over-the-counter, there is ____ liquidity and a ____ bid/ask spread.
A) less; narrower
B) more; narrower
C) more; wider
D) less; wider

Question

​When currency options are not standardized and are traded over-the-counter, there is ____ liquidity and a ____ bid/ask spread.
A) ​less; narrower
B) ​more; narrower
C) ​more; wider
D) ​less; wider

Quizplus · Accepted Answer

When currency options are not standardized and are traded over-the-counter (OTC), there is less liquidity because these transactions are customized and not as easily traded on a public exchange. This customization and lower liquidity typically result in a wider bid/ask spread, as it is harder to find a counterparty for the trade.

​When Currency Options Are Not Standardized and Are Traded Over-The-Counter

When Currency Options Are Not Standardized and Are Traded Over-The-Counter