Explanation:
Option A is correct because the over-the-counter (OTC) market has relatively low liquidity and is typically directly impacted by counterparty risks which could translate to market risk if a position has to be closed out unexpectedly. OTC market lacks the centralized and standardized features of the exchange-traded market.
Ultimate access to all questions.
A
It has limited liquidity and can result in market risk directly.
B
It gives an explicit definition on the margin required at a trade.
C
It requires initial margins and variation margins to cover potential future losses.
D
It involves standardized parameters that restrict customizing limits.
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