Forward Contract definition explanation

What is Forward Contract?
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. Read more for examples and further explanation including related video clips and also comments

Example 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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