An investor engaging in a transaction whereby he or she contracts to purchase British pounds one year from now is an example of a spot market transaction.

Question

Quizplus · Accepted Answer

The investor engaging in a transaction to purchase British pounds one year from now is engaging in a forward market transaction, not a spot market transaction. Spot market transactions involve the immediate purchase or sale of a currency, while forward market transactions involve a contract to buy or sell a currency at a set price and date in the future.

An Investor Engaging in a Transaction Whereby He or She