Question

Which of the following is not an advantage of Futures? 

A Price discovery Correct Answer Incorrect Answer
B Elimination of counter party risk Correct Answer Incorrect Answer
C Customised products meeting the requirements of the customers Correct Answer Incorrect Answer
D Transparent trading Correct Answer Incorrect Answer
E Improved liquidity Correct Answer Incorrect Answer

Solution

Futures have rather standardized products, which often leads to improving liquidity in futures. This works against this product when a client needs to hedge a specific amount to a date for which there is no standard contract.

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