CFA Practice Question

There are 253 practice questions for this study session.

CFA Practice Question

Which of the following is an agreement to trade currencies based on the exchange rate today for settlement within two business days?

A. triangle arbitrage transaction
B. spot trade
C. backward trade
D. futures trade
E. forward trade.
Correct Answer: B

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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