A ______________ involves an agreement today to buy or sell a specified amount of a foreign currency,for delivery at a specified future date,at a rate agreed upon today.

Question

Quizplus · Accepted Answer

A forward transaction involves agreeing today to buy or sell a specified amount of foreign currency at a predetermined rate on a future date. This allows parties to lock in an exchange rate to hedge against future currency fluctuations. Spot transactions, on the other hand, involve the immediate exchange of currencies at the current exchange rate. Arbitrage transactions involve taking advantage of discrepancies in exchange rates between different markets, and the foreign discount with respect to the domestic currency is not a commonly used term in finance.

A ______________ Involves an Agreement Today to Buy or Sell