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Distinguish between a spot market and forward market of foreign exchange. |
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Answer» A spot foreign exchange rate is the rate of a foreign exchange contract for immediate delivery (usually within two days). The spot rate represents the price that a buyer expects to pay for foreign currency in another currency. A forward foreign exchange is a contract to purchase or sell a set amount of a foreign currency at a specified price for settlement at a predetermined future date (closed forward) or within a range of dates in the future (open forward). |
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