forward contract

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Forward contract

A contract that specifies the price and quantity of an asset to be delivered in the future. Forward contracts are not standardized and are not traded on organized exchanges.

Forward Contract

An agreement to buy or sell an asset at a certain date at a certain price. That is, Investor A may make a contract with Farmer B in which A agrees to buy a certain number of bushels of B's corn at $15 per bushel. This contract must be honored whether the price of corn goes to $1 or $100 per bushel. Forward contracts can help reduce volatility in certain markets, but they contain the risks inherent to all speculative investing. These contracts may be sold on the secondary market, but the person holding the contract at its end must take delivery of the underlying asset. Forward contracts are identical to futures contracts except that their provisions are not standardized. That is, forwards may be written with any provisions the parties desire. While this allows for greater flexibility, this makes the contracts less liquid on the secondary market and prevents them from being traded on an exchange.

forward contract

An agreement between two parties to the sale and purchase of a particular commodity at a specific future time. Although forward contracts are similar to futures, they are not easily transferred or canceled. Thus, they are not liquid.

Forward contract.

A forward contract is similar to a futures contract in the sense that both types of contracts cover the delivery and payment for a specific commodity at a specific future date at a specific price.

The difference is that a futures contract has fixed terms, such as delivery date and quantity, and it's traded on a regulated futures exchange.

A forward contract is traded over the counter and all details of the contract are negotiated between the counterparties, or partners to the agreement.

The price specified in the forward contract for foreign currency, government securities, or other commodities may be higher or lower than the actual market price at the time of delivery, known as the spot price.

But the participants have locked in a price early specifically so they know what they will receive or pay for the product, eliminating market risk.

forward contract

see FUTURES MARKET.
References in periodicals archive ?
This eliminates risk when key compromise does happen, but does not protect forward security when de-synchronization happens.
A One-way Hash based Low-cost Authentication Protocol with Forward Security in RFID System, In: Proceedings of the 2nd International Asia Conference on Informatics in Control, Automation and Robotics, China, p .
17) proposed a dynamic group signature scheme with forward security.
and his secretariat to push forward security cooperation and coordination
In doing so, he shows that Canada's decisions to access nuclear weaponry were consistent with its national interest (necessity to work within an alliance or coalition, and maintaining forward security and relative military autonomy) and thus commensurate with the roles it had undertaken to play in the defense of North America and its NATO allies.
He has expressed confidence in the capacity of the Czechs, who hold the EU Presidency, to take forward security issues.
The attack came in the Shaab area which had just been cleared by American and Iraqi troops as part of the Operation Together Forward security drive.
CMCN(DV) Timothy Plummer stands a forward security watch during a Seabee Engineering Reconnaisance Team (SERT) mission in support of Exercise Tandem Thrust in the vicinity of Shoalwater Bay training area, Queensland, Australia.
During an offensive penetration, the regiment will have a forward detachment consisting of the forward security element (FSE) and the advanced-guard main body (AGMB).
In the most basic form of security--the screen--the security force must maintain contact with the enemy's forward security element (FSE), which is not a reconnaissance asset.

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