A spot trade, also known as a spot transaction, refers to the purchase or sale of a foreign currency, financial instrument or commodity for instant delivery on a specified spot date. Most spot contracts include physical delivery of the currency, commodity or instrument; the difference in price of a future or forward contract versus a spot contract takes into account the time value of the payment, based on interest rates and time to maturity. In a foreign exchange spot trade, the exchange rate on which the transaction is based is referred to as the spot exchange rate.
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