A ______________ occurs between a bank and a customer (company, broker, or another bank), calling for delivery at a fixed future date, of a specified amount of foreign exchange at the fixed forward exchange rate.

Question

Quizplus · Accepted Answer

A forward transaction is an agreement between two parties to exchange a specified amount of foreign currency at a fixed exchange rate at a future date. It is a common tool used to manage foreign exchange risk in international trade and investment. A swap involves the simultaneous purchase and sale of two different currencies to hedge against exchange rate fluctuations, and it is not the most accurate choice for the described scenario. "Fixed" is not a relevant choice, and a spot transaction refers to the immediate exchange of one currency for another at the current exchange rate.

A ______________ Occurs Between a Bank and a Customer (Company