Answer: traded over-the-counter.

## Explanation Forward contracts differ from futures contracts in several key ways: **Key Differences:** 1. **Trading Venue**: Forward contracts are traded over-the-counter (OTC), meaning they are privately negotiated between two parties, while futures contracts are traded on organized exchanges. 2. **Standardization**: Futures contracts are standardized in terms of contract size, delivery dates, and other specifications, whereas forward contracts are customizable to meet the specific needs of the parties involved. 3. **Marking to Market**: Futures contracts are marked to market daily, meaning gains and losses are settled each trading day. Forward contracts typically settle only at maturity. 4. **Counterparty Risk**: Forward contracts have higher counterparty risk since they are not cleared through a central clearinghouse, unlike futures contracts. **Why Option C is Correct:** - Forward contracts are indeed traded over-the-counter, which is one of their primary distinguishing characteristics from exchange-traded futures. **Why Options A and B are Incorrect:** - **Option A (standardized)**: This describes futures contracts, not forwards. Forwards are customizable and non-standardized. - **Option B (marked to market)**: This is a feature of futures contracts, not forwards. Forwards typically settle only at contract maturity. **Additional Context:** - The OTC nature of forwards allows for greater flexibility in contract terms but comes with higher counterparty risk. - Futures contracts' standardization and exchange trading make them more liquid and transparent than forwards.

Author: LeetQuiz .