Q.Distinguish between a spot market and a forward market.

Spot and forward markets differ mainly in the timing of delivery and payment relative to when the deal is agreed. …

A spot market is one in which the exchange of goods, services, or assets is settled essentially at once — delivery and payment both happen immediately or within a very short period, at whatever price is currently ruling in that market. Most everyday retail and wholesale transactions, such as buying vegetables in a local market or shares at the current traded price, are spot transactions. A forward market, by contrast, involves a contract entered into today that fixes the price, quantity, and terms for delivery and payment at a specified date in the future. This arrangement is especially useful for managing the risk of prices changing unfavourably before the actual delivery date — a trader who fears that the price of a commodity might rise before they need it can lock in today's price through a forward contract, and a producer who fears prices might fall can similarly protect …

A frequent mistake is describing a forward market as 'a market for the future' without explaining that the PRICE is fixed today even though delivery happens later — the price-fixing-in-advan …