Assume that a firm purchases foreign currency in order to complete the purchase of raw material from an overseas supplier.The currency is purchased today at an exchange rate that is good only for today.This transaction is referred to as a(n)[blank] transaction.

Question

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The described transaction is a spot transaction, which involves the immediate purchase or sale of a currency at the current exchange rate. Forward transactions, on the other hand, involve the purchase or sale of a currency for future delivery at a predetermined exchange rate. Arbitrage refers to taking advantage of pricing differences in different markets to make a profit. Exchange is a general term that refers to the buying and selling of currencies or other financial assets.

Assume That a Firm Purchases Foreign Currency in Order to Complete