Currency and Foreign Exchanges
Completion requirements
This section discusses currency exchange, exchange rates, and how currency exchange rates are determined based on the direct and indirect currency quotes (also known as the US and European terms, respectively). It also discusses spot rates, forward rates,
and cross rates. Why might companies use these tools?
Understand How to Determine Exchange Rates
Settlement and Delivery
The settlement of a forward contract occurs at the end of the contract. Futures contracts are marked-to-market daily, which means that daily changes are settled day by day until the end of the contract. Furthermore, the settlement of a futures contract
can occur over a range of dates. Forward contracts, on the other hand, only have one settlement date at the end of the contract.