An agreement to exchange currencies at some point in the future using an agreed-upon exchange rate is called a _____ trade.

Question

Quizplus · Accepted Answer

A forward trade involves an agreement to exchange currencies at a future date using an agreed-upon exchange rate. This is different from a spot trade (immediate exchange), a swap (simultaneous borrowing and lending in different currencies), and a floating (or flexible) exchange rate system. Triangle trade is not a relevant term in this context.

An Agreement to Exchange Currencies at Some Point in the Future