FINRA Practice Exam 2025 – Complete Prep Guide

The spot exchange rate is the correct choice because it represents the current market price at which one currency can be exchanged for another. When selling a fixed amount of a base currency to purchase a counter currency, this rate directly determines how much of the counter currency a trader will receive. An increase in the spot exchange rate means that the base currency has appreciated relative to the counter currency, resulting in more counter currency received for the same amount of base currency sold. Conversely, if the spot exchange rate decreases, fewer units of the counter currency will be obtained.

The other factors, while they can influence exchange rates over time or in a broader economic sense, do not have the immediate impact on the transaction at hand. For instance, the counter currency's inflation rate generally affects its long-term value but does not dictate the amount exchanged at the moment of the transaction. The trade balance might influence currency values by affecting supply and demand, but it is not the primary determinant at the point of sale. Similarly, the credit rating of the counter currency's government can impact confidence in the currency but does not set the exchange rate directly for specific transactions. Thus, the spot exchange rate is the key factor in determining the amount received when exchanging currencies.