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Forward Sale |
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Forward sale A method for hedging price risk that involves an agreement between a lender and an investor to sell particular kinds of loans at a specified price and future time. Forward Sale 1. The sale of a future loan in which the lender (seller) guarantees an investor a certain payment flow and interest rate. This is usually done to hedge against the investor's future foreign exchange risk and interest rate risk. 2. In Islamic banking, the purchase of and payment for a specified good or service at a price usually lower than market value, with delivery deferred until a set future date. A bank buys a commodity before it is grown or manufactured, then may re-sell it to a third party in order to turn a profit on the transaction. This is used as a form of financing for farms and businesses, and is governed by a salam contract. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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This was an exciting transaction due to the forward sale component, whereby we began to market the asset in the summer of 2005 before construction had commenced," commented Dunne. We continue to strongly urge that if you take the LDP, you must sell the carry in a forward sale contract and stay long the basis. There is also a practice called hedging--a forward sale of future production--which was prevalent in the 1990s when gold prices were falling and interest rates were high. |
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