Characteristics of forward contracts are customized contracts, traded by dealers or OTC markets, default risk, no initial deposit required, and settlement on maturity date.

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Forward contracts are indeed customized agreements between two parties to buy or sell an asset at a specified price on a future date. They are traded over-the-counter (OTC) rather than on centralized exchanges, which allows for customization but introduces counterparty (default) risk. Typically, no initial deposit is required, and the contract is settled at maturity.

Characteristics of Forward Contracts Are Customized Contracts, Traded by Dealers