What are the advantages and disadvantages of spot transaction?

Answer 1

Spot transactions offer the advantage of immediate execution, allowing parties to settle trades quickly at the current market price. This can be beneficial for businesses needing immediate liquidity or for investors seeking to capitalize on current market conditions. However, the main disadvantage is the exposure to price fluctuations, as the market can be volatile and prices can change rapidly. Additionally, spot transactions may require larger capital outlays upfront compared to other forms of trading, like futures or options.