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Basic Question 2 of 20
Which of the following is an agreement to trade currencies based on the exchange rate today for settlement within two business days?
B. spot trade
C. backward trade
D. futures trade
E. forward trade.
A. triangle arbitrage transaction
B. spot trade
C. backward trade
D. futures trade
E. forward trade.
User Contributed Comments 4
| User | Comment |
|---|---|
| kalps | note exchange rate today not exchagne rate in furute i.e. not a forward |
| DAS11 | key is when the settlement is |
| Tukker | Spot trades are settled in 48 hours |
| TheCFAGuy | DAS11 you couldn't be more wrong - the settlement date doesn't matter at all the key is when the effective date of the transaction is - i.e. the date the transaction is said to take effect in the contract (which can be immediately or in the future) if we trade using the spot rate right now and settlement gets held up due to a back office issue with trade documentation and it ends up taking a month to settle, it's still a spot transaction. it's just a spot transaction that took a month to settle. |
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Learning Outcome Statements
explain spot and forward rates and calculate the forward premium/discount for a given currency;
calculate the mark-to-market value of a forward contract;
CFA® 2024 Level II Curriculum, Volume 1, Module 8.