An agreement between a commercial bank and a corporate customer to exchange an exact amount of one currency for another on a specific future date is called a:

Question

Quizplus · Accepted Answer

The given scenario describes a forward contract. In a forward contract, both parties agree to exchange a specific amount of one currency for another at a predetermined future date and price. This is different from a spot contract, which involves the immediate exchange of currencies at the prevailing market rate. Optional and deferred contracts are not commonly used in foreign exchange transactions.

An Agreement Between a Commercial Bank and a Corporate Customer