The spot market for foreign exchange:
A) is a market that exists only in one place at one time.
B) is when a person borrows to speculate in the market.
C) are purchases and sales of currencies for immediate delivery.
D) is the rate of exchange quoted during the next business day.

Question

Quizplus · Accepted Answer

The spot market for foreign exchange refers to purchases and sales of currencies for immediate delivery, as opposed to forward contracts where delivery is at a later date. Option A is incorrect as the spot market is a decentralized market that is open 24 hours a day in different locations around the world. Option B is incorrect as borrowing to speculate in the market is known as leveraging, not spot trading. Option D is also incorrect as the spot rate is the rate of exchange at the present moment, not the next business day.

The Spot Market for Foreign Exchange