You have just agreed to a forward trade that will be settled six months from now. When will the exchange rate for this transaction be determined?

Question

Quizplus · Accepted Answer

The exchange rate for a forward trade is agreed upon at the time of the trade, which is today in this case. It is a contract where a buyer and seller agree to exchange currencies at a predetermined rate on a future date (in this case, six months from now). The exchange rate may fluctuate over time, but the parties involved have locked in their rate at the time of the trade.

You Have Just Agreed to a Forward Trade That Will