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      Question

      Which of the following is a non-deliverable forward

      (NDF) market feature?
      A Actual delivery of foreign currency Correct Answer Incorrect Answer
      B No settlement occurs Correct Answer Incorrect Answer
      C Cash settlement in domestic currency Correct Answer Incorrect Answer
      D Only for residents Correct Answer Incorrect Answer
      E Settled through RBI Correct Answer Incorrect Answer

      Solution

      NDFs are forward contracts where no physical delivery of currency occurs. Instead, profit/loss is settled in domestic currency, often used for currencies not freely traded (like INR offshore).

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