easy · FRM Part 1
In the context of derivative markets, what does the term 'counterparty credit risk' specifically refer to for an OTC forward?
- The risk that a clearinghouse fails to fulfill its guarantee to the market participants.
- The risk that the daily variation margin cannot be paid by the trader.
- The danger that the party on the other side of the contract defaults before the final settlement date.
- The risk that the price of the underlying asset moves against the long position.
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