Ace the Canadian Securities Course 2025 - Rock the CSC Practice Exam!

Question: 1 / 400

What characteristic is unique to exchange-traded derivatives compared to OTC-traded derivatives?

Customizable

Delivery usually takes place

Heavily regulated

Exchange-traded derivatives are unique because they are heavily regulated, meaning that they are subject to strict rules and oversight by regulatory agencies such as the Securities and Exchange Commission (SEC) in the United States. The other options are incorrect because they do not apply to all exchange-traded derivatives. Option A is incorrect because while some exchange-traded derivatives may be customizable, not all are. Option B is incorrect because delivery only takes place for physically settled derivatives, while for cash-settled derivatives, no physical delivery is necessary. Option D is incorrect because many exchange-traded derivatives do have a third party guarantor, such as a clearinghouse. This helps to mitigate counterparty risk and ensure the integrity of the market. Therefore, C is the most correct answer.

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No 3rd party guarantor

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