<Table> <Tr> <Td> </Td> <Td> This article does not cite any sources . Please help improve this article by adding citations to reliable sources . Unsourced material may be challenged and removed . (September 2008) (Learn how and when to remove this template message) </Td> </Tr> </Table> <Tr> <Td> </Td> <Td> This article does not cite any sources . Please help improve this article by adding citations to reliable sources . Unsourced material may be challenged and removed . (September 2008) (Learn how and when to remove this template message) </Td> </Tr> <P> In finance, a spot contract, spot transaction, or simply spot, is a contract of buying or selling a commodity, security or currency for immediate settlement (payment and delivery) on the spot date, which is normally two business days after the trade date . The settlement price (or rate) is called spot price (or spot rate). A spot contract is in contrast with a forward contract or futures contract where contract terms are agreed now but delivery and payment will occur at a future date . </P> <P> Depending on the item being traded, spot prices can indicate market expectations of future price movements in different ways . For a security or non-perishable commodity (e.g. silver), the spot price reflects market expectations of future price movements . In theory, the difference in spot and forward prices should be equal to the finance charges, plus any earnings due to the holder of the security, according to the cost of carry model . For example, on a share the difference in price between the spot and forward is usually accounted for almost entirely by any dividends payable in the period minus the interest payable on the purchase price . Any other cost price would yield an arbitrage opportunity and riskless profit (see rational pricing for the arbitrage mechanics). </P>

What is the difference between spot and forward contract
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