Forward Contract

Discipline: Economics

A sales agreement according to which the delivery of the items in question is to occur on a future date.

Market participants engage in forward contracts in order to hedge risks or cover opportunity costs.

Forward prices are constrasted with spot prices, which are paid as the exchange occurs, or 'on the spot.'

A forward contract can be designed for both tangible and intangible assets. When a standardized forward contract is traded in an exchange, it is usually referred to as a futures contract.

Also see:

· futures
· spot prices


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