[Solved] Forward contracts in the foreign exchange market are: — Ans: Contracts to buy or sell currency at a future date at a predetermined rate | Economic Awareness

Economic Awareness - Sectors of Indian Economy

Forward contracts in the foreign exchange market are:

AAgreements to exchange currency immediately at the current market rate

BContracts that guarantee profits regardless of exchange rate fluctuations

CContracts to buy or sell currency at a future date at a predetermined rate

DOnly used by central banks and not by private entities

Step-by-Step Solution

Step 1: Define forward contracts
Forward contracts are agreements to exchange currency at a specified future date at a rate agreed upon today.
Step 2: Eliminate incorrect options
They are not immediate transactions, do not guarantee profits, and are used by both private and public entities.
Final Answer:
Contracts to buy or sell currency at a future date at a predetermined rate → Option C
Quick Check:
Forward contracts = future currency exchange at fixed rate ✅

Quick Trick: Forward = 'forward-looking' future settlement.

Common Mistakes:

MISTAKES

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