The absorption and fluorescence spectra of a model diatomic molecule with a charge-transfer electronic transition are simulated. The effect of confining the solvent in which the diatomic molecule is dissolved is examined by comparing results for solutions contained within hydrophobic spherical cavities of varying size (radii of 10-20 Angstrom). The effect of solvent polarity is also considered by comparing results of simulations with CH3I and CH3CN solvents. The spectra, solute radial and angular distribution functions, and free energy surfaces in the solvent and radial solute position coordinates are presented and discussed. It is found that the solute position in the cavity critically affects the absorption and fluorescence spectra and their dependence on cavity size. The implications of these results for time-dependent fluorescence measurements are discussed.