What is a forward?
is a derivative financial product, through which and by a contract, the contractor agrees to purchase an asset for a specified price on a specified date. The most used forwards, contracts are often fixed income instruments and exchange rates of currencies.
Features fordwards
not require any payment at the time of signing the contract, since the price is fixed both parties by mutual agreement and is payable at a future time.
Upon expiration of the contract there is only one cash flow for a party.
The contract is binding and obliges the parties.
is usually not negotiable after the close of the contract, since there are no secondary markets for the trading of forwards.
risk of the operation can be very high.
Who does it?
Any business entity.
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