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Forward Price
(redirected from Forward rates)

    Also found in: Wikipedia 0.03 sec.
Forward Price
The predetermined price for an underlying asset decided upon by the long (the buyer) and the short (the seller) entering a forward agreement.

Notes:
Because a forward contract is a zero-sum game (i.e. there is an equal and opposite loss for any gain), the price agreed upon by both the long and the short is one that is equally beneficial to them at the time the contract is signed. Therefore, the contract has no value to either party at the outset of the contract. This is why it costs nothing to enter a forward contract.


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