ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The spot market is where financial instruments, such as commodities, currencies, and securities, are traded for immediate delivery. Delivery is the exchange of cash for the financial instrument. A futures contract, on the other hand, is based on the delivery of the underlying asset at a future date.

Detailed explanation-2: -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.

Detailed explanation-3: -Delivery refers to the physical exchange of a financial instrument or commodity with a cash consideration. The spot market is also known as the cash market or physical market because cash payments are processed immediately, and there is a physical exchange of assets.

Detailed explanation-4: -(a) Spot Market: It handles only spot transactions or current transactions in foreign exchange. ADVERTISEMENTS: Transactions are affected at prevailing rate of exchange at that point of time and delivery of foreign exchange is affected instantly.

Detailed explanation-5: -Spot Market and Exchanges The New York Stock Exchange (NYSE) is an example of an exchange where traders buy and sell stocks. This is a spot market. The Chicago Mercantile Exchange (CME) is an example of an exchange where traders buy and sell futures contracts; this is a futures market.