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A spot delivery contract really isn't much of a contract. You're a baker who needs sugar--you buy futures contracts but you've been hit with a huge order for cookies and you don't have enough sugar on hand to deal with the problem. Normally you'll have a line of credit established with a sugar company for just such occurrences. To make a spot contract, you call the sugar company and ask them to bring you a truckload of sugar. It shows up, you get the bill at the end of the month, all is well. That's a spot contract.
A forward delivery contract is for the sugar farmer. You have 500 acres of sugar beets. You have no idea of the exact tonnage of beets you are going to harvest or the exact date the harvest will be. To help manage your risk, you make a contract with a sugar refinery to sell them your whole crop when it is harvested for a specified price per ton.
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What is a Forex spot contract?
A spot contract, spot transaction, or simply spot, is a contract of buying or selling a commodity, security or currency for settlement (payment and delivery) on the spot date, which is normally two business days after the trade date. 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.
Difference between forward market and spot market?
Spot market is also known as "cash market" where the commodities are sell on the current price or the spot rate and deliver immediately, where as in case of forward market, market dealing with commodities for future delivery at prices agreed upon today (date of making the contract).
What is the delivery price in a forward contract?
The price that the buyer and seller agree on.
What is forward rate in foreign exchange market?
Transaction in future date by forward contract(future delivery) to purchase/sell foreign exchange at prevailing rate.
Ask us of the following best explains what a forward contract is?
A forward contract is the simplest of the Derivative products. It is a mutual agreement between two parties, in which the buyer agrees to buy a quantity of an asset at a specific price from the seller at a future date. The Price of the contract does not change before delivery. These type of contracts are binding, which means both the buyer and seller must stay committed to the contract. This means they are bound to deliver or take delivery of the product on which the forward contract was agreed upon. Forwards contracts are very useful in hedging
What are forward contracts in shares?
A forward contract is the simplest of the Derivative products. It is a mutual agreement between two parties, in which the buyer agrees to buy a quantity of an asset at a specific price from the seller at a future date. The Price of the contract does not change before delivery. These type of contracts are binding, which means both the buyer and seller must stay committed to the contract. This means they are bound to deliver or take delivery of the product on which the forward contract was agreed upon. Forwards contracts are very useful in hedging
What is the meaning of the term 'spot gold price' on the stock market?
The term "spot gold price" means that gold is purchased or sold for immediate payment or delivery. it is different than forward or future priced gold where the gold is bought or sold for future delivery.
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.
If you refuse delivery can you cancel a contract?
Refusing delivery does not automatically cancel a contract. You would need to follow the terms and conditions outlined in the contract to formally cancel it, which may involve additional steps such as providing written notice or paying a cancellation fee. It's important to review the contract and seek legal advice if needed.
How to Trade Commodities?
Untitled 1What is a Commodity?Commodities are actually physical items that can be handled, stored, and moved about. These are goods for which there is a commercial demand. Commodities include such items as corn, gold, and crude oil. They can be purchased and sold for immediate delivery, known as "spot" delivery, or promised by contract for future delivery. It is these contracts for future delivery that form the basis of the commodities trading market.What is a Future?In fact, what is traded in commodities trading markets is what are called futures or futures contracts. These have essentially the same features and effect as the forward delivery contract referred to above, but they are the embodiment of the exchange involved in commodities trading. These are traded in the commodities market through futures exchanges.Futures contracts serve an important and valuable purpose for purchasers of goods for use in production. A large commercial baker needing a bulk quantity of wheat at a certain time in the future wants to be sure of its availability. To ensure that availability, the maker can enter into a contract for its future delivery with a supplier. Price, quantity, and delivery are guaranteed by the contract, and the purchaser will pay contract price to complete the purchase.
What is carriage forward?
"Сarriage forward" means that the recipient shall pay for the delivery.
What is future and forward contract?
Forwards Contract: A forward contract is the simplest of the Derivative products. It is a mutual agreement between two parties, in which the buyer agrees to buy a quantity of an asset at a specific price from the seller at a future date. The Price of the contract does not change before delivery. These type of contracts are binding, which means both the buyer and seller must stay committed to the contract. This means they are bound to deliver or take delivery of the product on which the forward contract was agreed upon. Forwards contracts are very useful in hedging Futures Contract: A futures contract is an agreement to buy or sell an asset at a certain time in the future at a specific price. The Contractual terms of the futures contracts are very clear. The Futures market was designed to solve the shortcomings in the forwards contracts. Unlike forwards, futures are traded in organized exchanges. They also use a clearing house that provides the necessary protection to both the buyer and the seller. The price of the futures contract can change prior to delivery. Hence, both participants must settle daily price changes as per the contract values. Difference: Futures are traded in Organized Exchanges while Forwards are Over-The-Counter (OTC) traded
