Kinds of Foreign Exchange Market | Foreign Exchange Tutorials

Kinds of Foreign Exchange Market

There are several kinds of foreign exchange market:

1. Spot market: This is the market where currencies are bought and sold for immediate delivery. The settlement date is usually within two business days of the transaction.
2. Forward market: In this market, currencies are bought and sold for future delivery at a specified date and exchange rate. The transaction is agreed upon today but settled on a future date.
3. Futures market: Futures contracts are standardized contracts that trade on exchanges. They are agreements to buy or sell a specific currency at a predetermined price and date in the future.
4. Options market: Options are contracts that give the buyer the right, but not the obligation, to buy or sell a specific currency at a predetermined price and date in the future.
5. Interbank market: This is the market where banks trade currencies with each other. The interbank market is only accessible to banks and other financial institutions, and it is where the largest volumes of currency are traded.
6. Retail market: This is the market where individuals and small businesses can buy and sell currencies. This market is served by currency exchange companies, banks, and online trading platforms.

Practice Questions

1. Which market is where currencies are bought and sold for immediate delivery?
A) Forward market
B) Spot market
C) Futures market
D) Options market

Answer: B) Spot market

2. Which market involves buying and selling currencies for future delivery at a specified date and exchange rate?
A) Options market
B) Forward market
C) Spot market
D) Interbank market

Answer: B) Forward market

3. What is the futures market?
A) A market where individuals and small businesses can buy and sell currencies
B) A market where banks trade currencies with each other
C) A market where futures contracts are standardized contracts that trade on exchanges
D) A market where currencies are bought and sold for immediate delivery

Answer: C) A market where futures contracts are standardized contracts that trade on exchanges

4. What is the interbank market?
A) A market where individuals and small businesses can buy and sell currencies
B) A market where futures contracts are standardized contracts that trade on exchanges
C) A market where currencies are bought and sold for immediate delivery
D) A market where banks trade currencies with each other

Answer: D) A market where banks trade currencies with each other

Apply for Foreign Exchange Certification

https://www.vskills.in/certification/certified-foreign-exchange-professional

⃖ Previous                                                                   Next ⃗

Go back to Tutorial