1. Which of the following statements regarding counterparty credit risk is most accurate?

A. Counterparty risk is unilateral.

B. Over-the-counter (OTC) derivatives contain less counterparty risk than exchange-traded derivatives because the counterparty is known.

C. The precise future value of the contract is uncertain, but the counterparties are aware of whether the future value will be positive or negative.

D. Counterparty risk is typically associated with counterparty default prior to the settlement rather than default during the settlement process.