| Assertion [A] Forward market refers to a market in which transactions are settled on a future date at a rate agreed upon today. |
| Reason [R] Such transactions are entered into to gain by the changes in foreign exchange rate. |
A) Both Assertion [A] and Reason [R] are correct and Reason [R] is the correct explanation of Assertion [A]
B) Both Assertion [A] and Reason [R] are correct, but Reason [R] is not the correct explanation of Assertion [A]
C) Assertion [A] is correct, but Reason [R] is incorrect
D) Both Assertion [A] and Reason [R] are correct
Correct Answer: A
Solution :
In a forward market, trading happens in a future date at a rate pre-decided at a present rate. This is done to reduce the risk of exchange rate changes.
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