Trader A has agreed to give 100,000 U.S. dollars to Trader B in exchange for British pounds based on today's exchange rate of $1 = £.78. The traders agree to settle this trade within two business days. What is this exchange called?

Question

Quizplus · Accepted Answer

This exchange is called a spot trade, where the exchange of currency takes place immediately or within two business days. Options, futures, and forward trades involve contracts that specify the exchange of currency at a future date, while a swap involves the exchange of currencies with a predetermined agreement to reverse the exchange at a later date.

Trader a Has Agreed to Give 100,000 U