Question

Short Answer Type Questions:
Write short notes on: (i) Spot market; (ii) Forward market.

Answer 1

The spot rate of exchange or current rate of exchange is that rate which happens to prevail at the time when transactions are incurred. Spot market is of daily nature. It does not trade in future deliveries.

Forward market for foreign exchange is that market which handles such transactions of foreign exchange that are meant for future delivery. Such transactions are signed today but are to be honored on some future date.