answersLogoWhite

0

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.

User Avatar

Wiki User

11y ago

What else can I help you with?

Continue Learning about Finance

What is a standardized forward contract called?

A standardized forward contract is typically referred to as a futures contract. Unlike traditional forward contracts, which are customized agreements between two parties, futures contracts are traded on exchanges and have standardized terms regarding quantity, quality, and delivery dates. This standardization allows for greater liquidity and price discovery in the market.


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.


Forward market hedge?

forward market hedging is the way of making profit by predicting contract in advance to buy and sell of goods in the future.


Basic difference between forward contract and future contract?

Futures are traded in Organized Exchanges while Forwards are Over-The-Counter (OTC) traded


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

Related Questions

When you choose future contract over forward contract?

When there isn't an active market for the forward contract. Generally, Futures contracts have a much more active open market than forward contracts and have alot more choice in terms of expiration months than forward contracts.


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


What rolling forward contract is known?

A rolling forward contract is a financial agreement that allows parties to extend the maturity of a forward contract by simultaneously closing out the existing contract and entering into a new one with a later expiration date. This type of contract is commonly used in foreign exchange and commodities markets to manage risk and maintain exposure over time. By rolling forward, participants can adapt to changing market conditions while avoiding the need to settle the contract.


What best explains what a forward contract is?

A contract to deliver a particular commodity to a buyer sometime in the future.


What is equity roll-forward?

An equity roll forward allows an investor to maintain the investment position of a contract beyond its initial expiration. This occurs shortly after the initial contract ends.


What is equity roll forward?

An equity roll forward allows an investor to maintain the investment position of a contract beyond its initial expiration. This occurs shortly after the initial contract ends.


What is a forward commitment?

A forward contract is legally binding promise to perform some actions in the future . Forward commitments include forward contracts , future contracts and swaps


What are the Pro and con of forward contract?

personal injury lawyer


What is the delivery price in a forward contract?

The price that the buyer and seller agree on.


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.


Is the forward contract is legal in India?

if is done in national stock exchange it is legal


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