Canadian Securities Course (CSC) Level 1 Practice Exam

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Prepare for the Canadian Securities Course (CSC) Level 1 Exam. Engage with our quizzes, flashcards, and multiple-choice questions, complete with hints and explanations to help you succeed!

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What is the difference between a forward and a future?

They are interchangeable terms
Forward is only for commodities, futures for stocks
Forward is OTC, futures are traded on exchanges
Future is only for currencies, forward for stocks

The correct answer is: Forward is OTC, futures are traded on exchanges

The correct answer is C. Forward contracts are traded over-the-counter (OTC), meaning they are customizable contracts between two parties. On the other hand, futures contracts are standardized and traded on exchanges, providing more liquidity and transparency due to their centralized clearing. This distinction between OTC trading for forwards and exchange-trading for futures is a key differentiating factor between the two types of contracts.