"A forward contract is a type of derivative that represents a bilateral agreement to buy or sell an asset at a specific price (the “forward rate”) at a predetermined date in the future, usually to strategically hedge against price changes. The forward rate is a mutually agreed upon fair price at settlement, that takes into account factors like the spot price at the creation of the contract, growth from interest rates, and cost of storage. Forward contracts are handled between two parties, usually without the need for an exchange or clearing house, so both parties must trust each other to meet the terms of the agreement."
03 May, 2019
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