Answer: incur higher transaction costs.

**Explanation:** The correct answer is **C** because exchange-traded derivatives (ETD) typically have lower trading and transaction costs compared to over-the-counter (OTC) derivatives. This is due to the standardized nature of ETD contracts, which facilitates liquidity and reduces costs. - **Option A** is incorrect because it misrepresents the standardization aspect; ETD contracts are actually more standardized than OTC derivatives. - **Option B** is incorrect because it incorrectly states that OTC derivatives offer lower transparency. While OTC markets are less transparent than ETD markets, the question focuses on the cost aspect, not transparency. This question tests the candidate's understanding of the key differences between OTC and ETD markets, particularly in terms of transaction costs.

Author: LeetQuiz Editorial Team