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Long-Term Forward Contract

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Long-Term Forward Contract
A non-standardized, over-the-counter agreement in which one party agrees to buy a certain asset from the other at a certain price, at a certain time more than one year in the future. Because there is little secondary market for any forward contract, long-term forward contracts are zero-sum games; one party will win and the other will lose.


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The basic strategy calls for entering into long-term forward contracts for physical delivery with big grain suppliers such as Minneapolis-based Cargill Inc.
Sure, SAA would not have locked in the predictability of exchange rates for as long, but it would have mitigated the potential accounting impact of marking-to-market such long-term forward contracts.
Davis signed into law AB 1X, state legislation that authorizes the CDWR to purchase power in long-term forward contracts on behalf of the state's electric utilities.
 
 
 
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