Which method of trading currencies involves the conversion of one currency into another at one point in time with an agreement to reconvert it back to the original currency at some point in the future?
A) Forward transaction
B) Futures transaction
C) Spot transaction
D) Swap transaction

Question

Quizplus · Accepted Answer

The method of trading currencies that involves the conversion of one currency into another at one point in time with an agreement to reconvert it back to the original currency at some point in the future is known as a swap transaction. This type of transaction helps to manage currency risk and takes advantage of differences in interest rates between currencies. Forward, futures, and spot transactions are different types of currency trading methods.

Which Method of Trading Currencies Involves the Conversion of One