Question

How does the forward market differ from the spot market? Unlike the spot market, the forward market is an organizational setting that allows individuals, firms, and banks to trade foreign currencies. Unlike the spot market, the forward market permits receiving foreign exchange payments in the weeks or months ahead. Unlike the spot market, the forward market allows the buying and selling of foreign exchange for immediate delivery. Unlike the spot market, the forward market is an environment protecting investors’ expected profits from the risk of exchange rate fluctuations.

Answer 1

Unlike the spot market, the forward market permits receiving foreign exchange payments in the weeks or months ahead.

Step-by-step explanation:

Spot market for currencies is defined as one in which parties that's re involves in currency trade recieve delivery of the currency immediately.

On the other hand forward market allows parties involved to make foreign exchange payments in the future. This form of foreign exchange market allows a company to hedge the value of a currency over time.

For example of a company that imports goods does not want foreign exchange fluctuations to affect their future business, they can purchase a future option to buy the currency at a particular price in the future.