Which statement is correct?Question 7Select one:a.Transactions in FX market can be executed 24 hours a day b.Forward transaction represents a commitment to deliver or buy currency at some future date at the price established at that datec.Forward transaction represents only the right but not the commitment d.According to the spot transaction arrangements, exchange rate is established today for the delivery in three business days from todaye.Tom transaction represents an exchange of foreign currency for the domestic stock with settlement and delivery tomorrow
Question
Which statement is correct?Question 7Select one:a.Transactions in FX market can be executed 24 hours a day b.Forward transaction represents a commitment to deliver or buy currency at some future date at the price established at that datec.Forward transaction represents only the right but not the commitment d.According to the spot transaction arrangements, exchange rate is established today for the delivery in three business days from todaye.Tom transaction represents an exchange of foreign currency for the domestic stock with settlement and delivery tomorrow
Solution
The correct statement is a. Transactions in FX market can be executed 24 hours a day.
Here's why:
a. The Foreign Exchange (FX) market operates 24 hours a day due to the different time zones of the major financial centers around the world. This allows for continuous trading, making it the most liquid market in the world.
b. This statement is incorrect because a forward transaction represents a commitment to buy or sell a currency at a future date, but the price is established at the time of the agreement, not at the future date.
c. This statement is incorrect because a forward transaction is a commitment, not just a right. Once the agreement is made, both parties are obligated to fulfill the terms.
d. This statement is incorrect because a spot transaction involves the immediate exchange of currencies at the current market rate, not a rate established for delivery in three business days.
e. This statement is incorrect because a Tom transaction involves the exchange of currencies, not the exchange of foreign currency for domestic stock. The settlement and delivery for a Tom transaction does occur the next day.
Similar Questions
A forward currency transaction:Select one:a.Is Always At A Premium Over The Spot Rateb.Means That Delivery And Payment Must Be Made Within One Business Day (Usa/Canada) Or Two Business Days After The Transaction Datec.Calls For Exchange In The Future Of Currencies At An Agreed Rate Of Exchanged.Sets The Future Date When Delivery Of A Currency Must Be Made At An Unknown Spot Exchange Rate
A transaction in which the currencies to be exchanged the next day of the transaction is known asSelect one:a.Ready transactionb.Value todayc.Spot transactionsd.Value tomorrow
The transaction where the exchange of currencies takes place two days after the date of the contract is:Select one:a.Ready transactionb.Value todayc.Spot transactionsd.Value tomorrow
In the foreign exchange market, a spot transaction entails thea.the transfer of bank deposits at a predetermined later period.b.the trading of exports and imports at a predetermined time in the futurec.a prompt (within two days) export-import interchanged.an immediate (within two days) bank deposit swap
For most major currencies, which of the following time periods are common in forward exchange rate quotes?Question 8Select one:a.30 daysb.1 dayc.7 daysd.365 days
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