When Two Parties Agree to Exchange Currency and Execute the Deal

question 11

Multiple Choice

When two parties agree to exchange currency and execute the deal immediately,the transaction is referred to as a(n) :

• A)futures transaction.
• B)call option exercise.
• C)arbitrage transaction.
• D)spot exchange.

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Definitions:

Market Equilibrium

The state in which market supply and demand balance each other, resulting in stable prices.

Social Value

The importance or worth of something in terms of its contribution to society or the community.

Private Value

The value of a good or service to an individual rather than to society as a whole or to the market.

Externality

A cost or benefit arising from an activity or transaction that affects an unrelated third party who did not choose to incur that cost or benefit.