Which of the following statements are correct regarding the basics of derivatives?
- A forward contract is a standardized agreement traded on an exchange.
- Futures contracts are similar to forward contracts but are traded on exchanges.
- A swap is a derivative in which two parties exchange cash flows or liabilities from two different financial instruments.
1
Only 1
2
Only 2
3
1 and 2
4
2 and 3
5
1, 2, and 3