Which of the following is NOT an advantage of a futures contract over a forward contract?
A) reduced counterparty risk
B) increased flexibility
C) lower information cost
D) increased liquidity

Question

Quizplus · Accepted Answer

One advantage of a futures contract over a forward contract is that it provides increased flexibility. This is because futures contracts can be traded on an exchange and are standardized, whereas forward contracts are customized and traded over-the-counter. The other options (A, C, D) are all advantages of futures contracts over forward contracts. Futures contracts have reduced counterparty risk because they are backed by a clearinghouse, lower information costs because information about the contract is publicly available, and increased liquidity because they can be easily bought and sold on an exchange.

Which of the Following Is NOT an Advantage of a Futures