Question
Odtright forward transactions involve the exchange of currency or a future date beyond two business days at a fixed exchange rate, known as the __ spot rate reverse transaction rate option rate forward rate
Answer
4.6
(240 Votes)
Aaron
Master · Tutor for 5 years
Answer
D. Forward Rate
Explanation
## Step 1:Begin by understanding what outright forward transactions mean. In foreign exchange markets, outright forward transactions are agreements to exchange two distinct currencies on a specific future date, going beyond the routine timeframe of two business days, used in spot transactions.## Step 2:Now acknowledge which rate is used in these transactions. Unlike spot trades that use spot rates, and option transactions using option rates, forward transactions design their agreements around a unique rate known as the forward rate.## Step 3:The Forward Rate in an outright forward transaction helps decide the exchange rate at which the business transaction will transpire later. This rate is decided at the time when the agreement/contract is signed. This logic leads us directly to the accurate answer for the given question.