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Forward Contract

A forward contract is an agreement to buy or sell an asset at a predetermined price on a future date. It allows parties to determine the price today for a transaction that will occur at a later time. Most forward contracts are customized agreements between two parties, unlike futures contracts which are standardized and traded on exchanges.

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89 views

Forward Contract

A forward contract is an agreement to buy or sell an asset at a predetermined price on a future date. It allows parties to determine the price today for a transaction that will occur at a later time. Most forward contracts are customized agreements between two parties, unlike futures contracts which are standardized and traded on exchanges.

Uploaded by

Gaurav
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Forward Contract

What Does Forward Contract Mean?


A cash market transaction in which delivery of the commodity is deferred until after the contract
has been made. Although the delivery is made in the future, the price is determined on the initial
trade date.

Investopedia explains Forward Contract


Most forward contracts don't have standards and aren't traded on exchanges. A farmer would use
a forward contract to "lock-in" a price for his grain for the upcoming fall harvest.

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