A common type of swap transaction in the foreign exchange market is the ________ where the dealer buys the currency in the spot market and sells the same amount back to the same bank in the forward market.
A) "forward against spot"
B) "forspot"
C) "repurchase agreement"
D) "spot against forward"

Question

Quizplus · Accepted Answer

This transaction is known as "spot against forward" because it involves a spot transaction (buying currency in the spot market) and a forward transaction (selling the same amount back in the forward market) simultaneously with the same counterparty.

A Common Type of Swap Transaction in the Foreign Exchange