Traders and investors trading in a forward transactions market are most concerned about:
A) Political and social stability of the foreign country
B) Change in the spot rate
C) Regulation from the International Monetary Fund
D) Currency hedging

Question

Quizplus · Accepted Answer

Traders and investors trading in a forward transactions market are primarily concerned about changes in the spot rate, as their obligation is to purchase or sell a currency at a predetermined price in the future. The spot rate at the time of settlement will determine whether the transaction results in a profit or loss. While political and social stability, regulation from the International Monetary Fund, and currency hedging may also be of concern, they are not as directly related to the success of the forward transaction. Traders and investors in a forward transactions market are most concerned about the change in the spot rate as it can affect the value of the transaction. The spot rate refers to the current exchange rate at the time of the transaction. Political and social stability of the foreign country, regulation from the International Monetary Fund, and currency hedging may also be important factors to consider, but they are not as crucial as the change in the spot rate.

Traders and Investors Trading in a Forward Transactions Market Are