0
A futures (not future) contract obligates the seller to produce a certain amount and quality of a certain commodity on a certain date, for which he will be paid a certain price. Such as, 5000 bushels of hard red wheat on July 7 for $7 per bushel.
A forward contract is similar but can be customized--such as "my entire crop of hard red wheat, upon harvest, for $6.80 per bushel." A true futures contract wouldn't work for a farmer for obvious reasons--on July 7 the wheat might have too much moisture in it so it can't be harvested yet, or the crop could be larger or smaller than predicted.
What else can I help you with?
Difference between Spot Exchange Rate and Exchange rate?
An exchange rate, which is also called the foreign-foreign exchange rate, is the rate that currency will be exchanged for another currency and may have a forward contract. The spot exchange rate is the current exchange rate today with immediate delivery and it is also called benchmark rates and outright rates.
What is the basic difference between a forward and future market?
A forward contract is a private and customizable contract that needs to be settled at the end of the agreement and is traded over the counter. A futures contract has standardized terms and is traded on an stock or commodity exchange, where prices are settled on a daily basis until the end of the contract.
What are the differences between a forward contract a future contract and options?
1) forward contract is not standardised one..it is only traded in OTC(over the counter) where as future contract is a standardised one it is traded in Secondary Market
Distinguish between void and illegal contracts?
The main difference between a void contract and an illegal contract is that a void contract is no longer valid. It's lost its authenticity. An illegal contract is a contract that is not legal in the name of law. Therefore, it is not relevant.
What is the difference between hedging and forward contracts?
A forward contract is an agreement between two parties to buy or sell an asset at a certain future time for a certain price agreed today. An option is an agreement between two parties for the option to buy or sell an asset at a certain future time for a certain price agreed today. The main difference is that a forward contract has to happen while an option may or may not happen depending on the value of the asset compared to the agreed price
Distinguish between a specialty contract and a simple contract?
The difference between a simple and specialty contract that a simple contract can be done orally, or in writing. A specialty contract must be signed by the parties and must have a seal attached.
What is a forward contract?
A customized contract between two parties to buy or sell an asset at a specified price on a future date. A forward contract can be used for hedging or speculation, although its non-standardized nature makes it particularly apt for hedging.
What is the distinguish between?
how can you distinguish between them
What is the difference between a forward contract and a cash transaction?
In a forward contract, you are setting the price now for something you'll buy later. A cash transaction involves setting the price for something you're buying today.
What is the difference between spot and forward exchange rate?
In forward exchange rate, the rate is booked in advance for a fixed amount and period,which will remain unchanged in case of any market fluctuation or deceleration.In fact forward exchange rate booking is done to protect or guard against volatile market condition. In spot exchange rate, the exchange rate prevalent on a particular date is booked for immediate effect.
Basic difference between forward contract and future contract?
Futures are traded in Organized Exchanges while Forwards are Over-The-Counter (OTC) traded
Difference between futures market and forward market?
A Futures market is a forward market that trades through a centralised exchange, just like most stocks do. The classic forward market occurs as an Over-The-Counter (OTC) trade, rather than through an exchange.
