Which of the following best describes the spot market?

The spot market is defined as a marketplace where financial instruments, including commodities, currencies, and securities, are purchased and sold for immediate delivery and settlement. This means that when a transaction occurs in the spot market, the buyer pays for the asset, and the seller delivers it right away, or as quickly as possible, usually on the same day. The defining characteristic of the spot market is this immediacy of transaction and settlement.

In contrast to other markets, such as futures markets which deal with agreements for later delivery, the spot market focuses on current prices and immediate fulfillment of contracts. This characteristic of immediate transaction makes the spot market essential for participants who need to react quickly to changing market conditions.

Understanding that the spot market encompasses various types of assets, including but not limited to commodities, underscores its broader scope beyond just one category or payment type.