Question

What is a characteristic of a Forward Transaction?

a.

Settlement takes place immediately

b.

The rate of exchange is fixed on the transaction date

c.

It involves the exchange of currencies for a fixed period of time

d.

The transfer of money occurs before the settlement date

Answer: (c).It involves the exchange of currencies for a fixed period of time Explanation:In a Forward Transaction, the transaction between the parties is done at the rate of exchange fixed on the transaction date, while settlement takes place at a future date, and the transfer of money is not effected before the settlement date.

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Q. What is a characteristic of a Forward Transaction?

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