In the FX markets a forward transaction refers to the:
A) spot rate.
B) exchange rate that is determined at a specified date beyond the spot rate.
C) exchange rate that is specified now, but with delivery and payment at some predetermined future date.
D) upper limit of a currency bid-ask spread.

Question

Quizplus · Accepted Answer

In a forward transaction, two parties agree to exchange currencies at a predetermined future date, at a rate that is specified now. This rate is known as the forward rate and is typically different from the spot rate (the exchange rate for immediate delivery). Therefore, choice C is the correct answer.

In the FX Markets a Forward Transaction Refers to The